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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 17, 2001
BY AND AMONG
ARISTOCRAT LEISURE LIMITED,
CEDAR ACQUISITION CORP.
AND
CASINO DATA SYSTEMS
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TABLE OF CONTENTS
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PAGE
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ARTICLE I THE MERGER.......................................................................2
SECTION 1.1. The Merger..............................................................2
SECTION 1.2. Closing.................................................................2
SECTION 1.3. Effective Time..........................................................2
SECTION 1.4. Effects of the Merger...................................................2
SECTION 1.5. Articles of Incorporation and Bylaws....................................2
SECTION 1.6. Directors...............................................................2
SECTION 1.7. Officers................................................................2
SECTION 1.8. Additional Actions......................................................3
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES...........................................3
SECTION 2.1. Effect on Capital Stock.................................................3
SECTION 2.2. Exchange of Certificates................................................4
SECTION 2.3. Stock Options...........................................................5
SECTION 2.4. No Liability............................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................6
SECTION 3.1. Organization and Qualification; subsidiaries............................6
SECTION 3.2. Capitalization of the Company and its subsidiaries......................7
SECTION 3.3. Authority Relative to this Agreement; Recommendation....................8
SECTION 3.4. SEC Reports; Financial Statements.......................................8
SECTION 3.5. Information Supplied....................................................9
SECTION 3.6. Consents and Approvals; No Violations...................................9
SECTION 3.7. No Default.............................................................10
SECTION 3.8. Absence of Changes.....................................................10
SECTION 3.9. Litigation.............................................................10
SECTION 3.10. Compliance with Applicable Law.........................................11
SECTION 3.11. Employee Benefit Plans; Labor Matters..................................12
SECTION 3.12. Environmental Laws and Regulations.....................................14
SECTION 3.13. Taxes..................................................................15
SECTION 3.14. Intellectual Property..................................................16
SECTION 3.15. Vote Required..........................................................19
SECTION 3.16. Opinion of Financial Adviser...........................................20
SECTION 3.17. Brokers................................................................20
SECTION 3.18. Property...............................................................20
SECTION 3.19. Contracts..............................................................21
SECTION 3.20. State Takeover Statutes................................................21
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION.......................21
SECTION 4.1. Organization...........................................................22
SECTION 4.2. Authority Relative to this Agreement...................................22
SECTION 4.3. Information Supplied...................................................22
SECTION 4.4. Consents and Approvals; No Violations..................................22
SECTION 4.5. Adequate Funds.........................................................23
SECTION 4.6. No Prior Activities....................................................23
SECTION 4.7. Ownership of Securities................................................23
SECTION 4.8. Financial Statements...................................................23
ARTICLE V COVENANTS.......................................................................24
SECTION 5.1. Conduct of Business....................................................24
SECTION 5.2. Other Potential Acquirors..............................................27
SECTION 5.3. Preparation of the Proxy Statement; Stockholders' Meeting..............29
SECTION 5.4. Access to Information; Confidentiality.................................30
SECTION 5.5. Reasonable Efforts; Notification.......................................31
SECTION 5.6. Takeover Statutes; Inconsistent Actions................................32
SECTION 5.7. Indemnification, Exculpation and Insurance.............................32
SECTION 5.8. Fees and Expenses......................................................34
SECTION 5.9. Public Announcements...................................................34
SECTION 5.10. Status of Company Employees; Employee Benefits.........................34
SECTION 5.11 Governmental Approvals.................................................35
ARTICLE VI CONDITIONS PRECEDENT............................................................36
SECTION 6.1. Conditions to Each Party's Obligations to Effect the Merger............36
SECTION 6.2. Additional Conditions to Obligations of Parent and Acquisition.........36
SECTION 6.3. Additional Conditions to Obligations of the Company....................37
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER...............................................38
SECTION 7.1. Termination............................................................38
SECTION 7.2. Effect of Termination..................................................39
SECTION 7.3. Amendment..............................................................40
SECTION 7.4. Extension; Waiver......................................................40
SECTION 7.5. Termination Fee........................................................40
ARTICLE VIII GENERAL PROVISIONS..............................................................41
SECTION 8.1. Nonsurvival of Representations and Warranties..........................41
SECTION 8.2. Notices................................................................41
SECTION 8.3. Definitions............................................................42
SECTION 8.4. Interpretation.........................................................42
SECTION 8.5. Counterparts; Facsimile................................................42
SECTION 8.6. Entire Agreement; No Third-Party Beneficiaries.........................42
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SECTION 8.7. Governing Law..........................................................42
SECTION 8.8. Assignment.............................................................42
SECTION 8.9. Enforcement............................................................43
SECTION 8.10. Waiver of Jury Trial...................................................43
SECTION 8.11. Personal Liability.....................................................43
SECTION 8.12. Severability...........................................................43
SECTION 8.13. Financing..............................................................44
SECTION 8.14. Materiality............................................................44
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TABLE OF DEFINED TERMS
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CROSS REFERENCE
TERM IN AGREEMENT PAGE
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Acquisition ..................................................Preamble..........................................1
Agreement ....................................................Preamble..........................................1
Budget .......................................................Section 3.1(c)....................................6
Certificates .................................................Section 2.2(a)....................................4
Closing Date..................................................Section 1.2.......................................2
Code..........................................................Section 3.11(b)..................................12
Company Common Stock..........................................Preamble..........................................1
Company Disclosure ...........................................Schedule Art. III.................................6
Company Employees ............................................Section 5.10(a)..................................34
Company Financial Adviser.....................................Section 3.16.....................................20
Company Intellectual Property Rights..........................Section 3.14(c)..................................17
Company Letter of Transmittal.................................Section 2.2(a)....................................4
Company Material Adverse Effect...............................Section 3.1(c)....................................6
Company Permits...............................................Section 3.10(a)..................................11
Company.......................................................Preamble..........................................1
Company SEC Reports...........................................Section 3.4.......................................8
Company Securities............................................Section 3.2(a)....................................7
Company Stock Option(s).......................................Section 2.3.......................................5
Company Stockholders' Meeting.................................Section 3.5.......................................9
Confidentiality Agreement.....................................Section 5.2(a)...................................27
Contractor....................................................Section 5.4(b)(iii)..............................31
Copyrights....................................................Section 3.14(a)(i)...............................17
Effective Time................................................Section 1.3.......................................2
Employee Plans................................................Section 3.11(a)..................................12
ERISA Affiliate...............................................Section 3.11(a)..................................12
ERISA.........................................................Section 3.11(a)..................................12
Exchange Act..................................................Section 3.2(c)....................................8
Exchange Agent................................................Section 2.2(b)....................................4
Excluded Shares...............................................Section 2.1(a)(i).................................3
Expenses......................................................Section 7.5......................................40
Governmental Approvals........................................Section 5.11(a)..................................35
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Governmental Entity...........................................Section 3.6.......................................9
HSR Act.......................................................Section 3.6.......................................9
Income Tax....................................................Section 3.13(a)(i)...............................15
Indemnified Liabilities.......................................Section 5.7(b)...................................33
Indemnified persons...........................................Section 5.7(b)...................................33
Leased Property...............................................Section 3.18(b)..................................20
Leases........................................................Section 3.18(b)..................................20
Lien..........................................................Section 3.2(b)....................................8
Merger Consideration..........................................Section 2.1(a)(i).................................3
Merger........................................................Preamble..........................................1
Notifying Party...............................................Section 5.11(a)..................................35
NRS...........................................................Preamble..........................................1
Opinion.......................................................Section 3.16.....................................20
Outside Date..................................................Section 7.1(e)...................................38
Owned Property................................................Section 3.18(a)..................................20
Parent Benefit Plans..........................................Section 5.10(a)..................................34
Parent Disclosure Schedule ...................................Article IV.......................................21
Parent Financial Statements...................................Section 4.8......................................23
Parent Material Adverse Effect................................Section 4.1(b)...................................22
Parent........................................................Preamble..........................................1
Patents.......................................................Section 3.14(a)(i)...............................16
PBGC..........................................................Section 3.11(c)..................................13
Principal Stockholders........................................Preamble..........................................1
Property......................................................Section 5.4(b)(i)................................31
Proxy Statement...............................................Section 3.5.......................................9
SEC...........................................................Section 3.4.......................................8
Securities Act................................................Section 3.4.......................................8
Stock Option Plans............................................Section 2.3.......................................5
Stockholder Approval..........................................Preamble..........................................1
Surviving Corporation.........................................Section 1.1.......................................2
Tax Return....................................................Section 3.13(a)(iii).............................15
Tax/Taxes.....................................................Section 3.13(a)(ii)..............................15
Termination Fee...............................................Section 7.5......................................40
Third Party...................................................Section 5.2(e)...................................28
Trademarks....................................................Section 3.14(a)(i)...............................16
Voting Agreement..............................................Preamble..........................................1
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 17, 2001 (this
"AGREEMENT"), by and among ARISTOCRAT LEISURE LIMITED, an Australian company
("PARENT"), CEDAR ACQUISITION CORP., a Nevada corporation and an indirect wholly
owned subsidiary of Parent ("ACQUISITION"), and CASINO DATA SYSTEMS, a Nevada
corporation (the "COMPANY").
BACKGROUND
A. The respective Boards of Directors of Parent, Acquisition and the
Company have approved, and deem it fair to and in the best interests of their
respective shareholders and stockholders to consummate, the merger of
Acquisition with and into the Company (the "MERGER"), upon the terms and subject
to the conditions set forth in this Agreement and in accordance with the Nevada
Revised Statutes ("NRS"), whereby each issued and outstanding share of common
stock of the Company, no par value per share (the "COMPANY COMMON STOCK"), other
than shares to be cancelled in accordance with Section 2.1(c), will be converted
into the right to receive the Merger Consideration (as defined below).
B. This Agreement and the Merger are required to be approved by the
holders of a majority of the outstanding shares of the Company Common Stock (the
"STOCKHOLDER APPROVAL").
C. As a condition and inducement to Parent and Acquisition entering
into this Agreement and incurring the obligations set forth herein, concurrently
with the execution and delivery of this Agreement, Parent and certain
stockholders of the Company ("PRINCIPAL STOCKHOLDERS") are simultaneously
entering into a Voting Agreement (the "VOTING AGREEMENT") pursuant to which,
among other things, such stockholders have agreed to vote certain of the shares
of Company Common Stock owned by such stockholders (aggregating approximately
9.5% of the outstanding capital stock of the Company) in favor of the approval
of this Agreement and the Merger.
D. Parent, Acquisition and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
AGREEMENT
In consideration of the foregoing and the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with Chapter 92A of
the NRS, Acquisition shall be merged with and into the Company at the Effective
Time (as defined in Section 1.3). As a result of the Merger, the separate
corporate existence of Acquisition shall cease and the Company shall continue as
the surviving corporation (the "SURVIVING CORPORATION").
SECTION 1.2 CLOSING. The closing of the Merger will take place
at 10:00 a.m. on a date to be specified by the parties, which shall be no later
than the second business day after satisfaction or waiver of the conditions set
forth in Article VI (the "CLOSING DATE"), at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 300 South Grand Avenue, Los Angeles, California
90071, unless another time, date or place is agreed to in writing by the parties
hereto.
SECTION 1.3 EFFECTIVE TIME. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall
prepare, execute and acknowledge and file articles of merger in such form as is
required by Section 92A.200 of the NRS and shall make all other filings or
recordings as are required under the NRS. The Merger shall become effective at
such time as such filing or filings are made with the Secretary of State of the
State of Nevada, or at such other time on or within 90 days after such filing as
Parent and the Company shall agree and as is specified in such filings (the date
and time of such effectiveness, being the "EFFECTIVE TIME").
SECTION 1.4 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 92A.250 of the NRS and all other effects specified
in the applicable provisions of the NRS.
SECTION 1.5 ARTICLES OF INCORPORATION AND BYLAWS. At the
Effective Time, the Articles of Incorporation and Bylaws of Surviving
Corporation shall be amended to be identical to the Articles of Incorporation
and Bylaws, respectively, of Acquisition as in effect immediately prior to the
Effective Time (except that the name of the Surviving Corporation shall be the
same as the name of the Company), until thereafter changed or amended as
provided therein or by applicable law.
SECTION 1.6 DIRECTORS. At the Effective Time, except as set
forth on EXHIBIT 1.6, each of the directors of the Company and its subsidiaries
shall resign or be removed from the Board of Directors of the Company and its
subsidiaries, respectively. The directors of Acquisition immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified at the Effective Time, as the case may be.
SECTION 1.7 OFFICERS. Except as set forth on EXHIBIT 1.7, the
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation at the Effective Time and shall hold
office until the earlier of their death, resignation or removal or until their
successors are duly appointed and qualified.
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SECTION 1.8 ADDITIONAL ACTIONS. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of Acquisition or the Company or otherwise to carry
out this Agreement, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of
Acquisition or the Company, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of Acquisition or the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Acquisition,
the Company or the holders of any shares of Company Common Stock or any shares
of capital stock of Acquisition:
(a) CONVERSION OF COMMON STOCK.
(i) At the Effective Time, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock owned by the Company or any
subsidiary of the Company, or Parent, Acquisition or any other subsidiary of
Parent (the "EXCLUDED SHARES") shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive, without interest, $ 9.25 in cash (the "MERGER CONSIDERATION").
(ii) As of the Effective Time, all shares of Company
Common Stock shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each certificate previously
representing any such shares shall thereafter represent the right to receive the
Merger Consideration upon surrender of such certificates in accordance with
Section 2.2. The holders of such certificates previously evidencing such shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock as of the Effective Time except as otherwise provided herein or by law.
(b) CAPITAL STOCK OF ACQUISITION. Each share of the capital
stock of Acquisition issued and outstanding immediately prior to the Effective
Time shall be converted into one fully paid and nonassessable share of common
stock of the Surviving Corporation.
(c) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK.
Each share of Company Common Stock that is owned by the Company or by any
subsidiary of the Company and each share of Company Common Stock that is owned
by Parent, Acquisition or any other subsidiary of Parent immediately prior to
the Effective Time shall automatically be cancelled and retired and shall cease
to exist without any conversion thereof and no consideration shall be delivered
with respect thereto.
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SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) Promptly after the Effective Time, the Exchange Agent (as
defined below) shall mail to each holder of record of Company Common Stock
immediately prior to the Effective Time (other than Excluded Shares) (i) a
letter of transmittal (the "COMPANY LETTER OF TRANSMITTAL") (which shall specify
that delivery shall be effected, and risk of loss and title to the Company
certificates representing shares of the Company Common Stock (the
"CERTIFICATES") shall pass, only upon delivery of such Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Parent shall reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration with
respect to the shares of Company Common Stock formerly represented thereby.
(b) Prior to the Effective Time, Parent shall cause to be
deposited with the party specified by Parent as the exchange agent (the
"EXCHANGE AGENT") amounts sufficient in the aggregate to provide all funds
necessary for the Exchange Agent to make payments pursuant to Section 2.1(a)(i)
hereof to holders of Company Common Stock issued and outstanding immediately
prior to the Effective Time who are entitled to receive the Merger
Consideration. Any interest, dividends, or other income earned on the investment
of cash deposited by Parent with the Exchange Agent in accordance with this
Section 2.2(b) shall be for the account of and payable to Parent.
(c) Upon surrender to the Exchange Agent of Certificates,
together with the Company Letter of Transmittal, duly executed and completed in
accordance with the instructions thereto, and only upon such surrender, the
holder of such Certificate shall be entitled to receive, in exchange therefor,
and Parent shall cause the Exchange Agent to promptly cause to be delivered to
such holder a check in an amount equal to the Merger Consideration payable for
each such share of Company Common Stock represented by such Certificate, after
giving effect to any required tax withholdings or transfer taxes or other
similar taxes. The Certificates surrendered pursuant to this Section 2.2(c)
shall forthwith be cancelled. If any Certificate shall have been lost, stolen,
mislaid or destroyed, then upon receipt of an affidavit of that fact from the
holder claiming such Certificate to be lost, mislaid, stolen or destroyed and a
lost certificate indemnity (in each case reasonably satisfactory to Parent and
the Exchange Agent), the Exchange Agent shall issue to such holder the Merger
Consideration into which the shares represented by such lost, stolen, mislaid or
destroyed Certificate shall have been converted, after giving effect to any
required tax withholdings or transfer taxes or other similar taxes.
(d) No interest will be paid or will accrue on the amount
payable upon the surrender of any Certificate. If payment is to be made to a
person other than the registered holder of the Certificate surrendered, it shall
be a condition of such payment that the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer, as determined by
the Exchange Agent or Parent, and that the person requesting such payment shall
pay any transfer or other taxes required by reason of the payment to a person
other than the registered holder of the Certificate surrendered or establish to
the satisfaction of the Parent or the Exchange Agent that such tax has been paid
or is not payable. One hundred eighty (180) days
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following the Effective Time, Parent shall be entitled to cause the Exchange
Agent to deliver to it any funds (including any interest received with respect
thereto) made available to the Exchange Agent which have not been disbursed to
holders of certificates formerly representing shares of Company Common Stock
outstanding on the Effective Time, and thereafter such holders shall be entitled
to look to the Parent only as general creditors thereof with respect to cash
payable upon due surrender of their Certificates.
(e) In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, Merger
Consideration may be paid or issued to a person other than the person in whose
name the Certificate so surrendered is registered, if such Certificate,
accompanied by all documents required to evidence and effect such transfer,
shall be properly endorsed with signature guarantees or otherwise be in proper
form for transfer, and the person requesting such payment shall pay any transfer
or other taxes required by reason of the payment of the Merger Consideration to
a person other than the registered holder of such Certificate or establish to
the satisfaction of Parent that such tax has been paid or is not applicable.
(f) The Merger Consideration paid upon the surrender for
exchange of Certificates in accordance with the terms of this Article II shall
be deemed to have been paid and issued in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented by such
Certificates. At the Effective Time, the stock transfer books of the Company
shall be closed, and there shall be no further registrations of transfers of
shares of Company Common Stock thereafter on the records of the Company.
SECTION 2.3 STOCK OPTIONS. (a) At the Effective Time, each
outstanding option to purchase shares of Company Common Stock (a "COMPANY STOCK
OPTION" or, collectively, the "COMPANY STOCK OPTIONS") issued pursuant to the
Company's 1993 Stock Option and Compensation Plan and the Company's 1994
Non-Employee Director Stock Option Plan or otherwise (collectively, the "STOCK
OPTION PLANS"), whether vested or unvested, shall be canceled and each holder of
a Company Stock Option shall be entitled to receive in exchange therefor cash in
an amount equal to the product of (a) the difference between the Merger
Consideration and the exercise price per share of such Company Stock Option,
multiplied by (b) the number of shares subject to such Company Stock Option,
less any applicable Taxes withheld by the Company under applicable law.
(b) In connection with such cancellation, the Company shall
use reasonable best efforts to obtain any required consents from holders of
Company Stock Options as required pursuant to the Stock Option Plans. The
Company shall use reasonable best efforts to take all other actions necessary
and appropriate so that all stock option and other equity-based plans maintained
with respect to the Company Common Stock, including, without limitation, the
Stock Option Plans, shall terminate as of the Effective Time, and the provisions
of any other Employee Plan (as defined in Section 3.11(a) hereof) providing for
the issuance, transfer or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall be deleted as of
the Effective Time, and the Company shall ensure that following the Effective
Time no holder of a Company Stock Option or any participant in any Stock Option
Plan shall have any rights thereunder to acquire any capital stock of the
Company, Parent or the Surviving Corporation.
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SECTION 2.4 NO LIABILITY. None of Parent, Acquisition, the
Company or the Exchange Agent shall be liable to any holder of shares of Company
Common Stock for any cash otherwise payable to such holder of shares of Company
Common Stock or paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as publicly disclosed by the Company in the Company SEC Reports
filed with the SEC prior to the date hereof and except as set forth on the
Disclosure Schedule (it being agreed that disclosure of any item in such
schedule shall be deemed disclosure with respect to any section of this
Agreement) previously delivered by the Company to Parent (the "COMPANY
DISCLOSURE SCHEDULE"), the Company hereby represents and warrants to each of
Parent and Acquisition as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Section 3.1(a) of the Company Disclosure Schedule contains
a complete and accurate list of each subsidiary of the Company as of the date
hereof and its respective jurisdiction of incorporation or organization, as the
case may be. Each of the Company and its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted. The Company has heretofore delivered to
Parent accurate and complete copies of the Articles of Incorporation and Bylaws
(or similar governing documents), as currently in effect, of the Company and its
subsidiaries.
(b) The respective articles of incorporation and bylaws or
other organizational documents of the subsidiaries of the Company do not contain
any provision limiting or otherwise restricting the ability of the Company to
control such subsidiaries, other than as required by Gaming Laws. The Company
does not directly or indirectly beneficially own any securities or other
beneficial ownership interests in any other entity (including through joint
ventures or partnership arrangements) other than (i) the subsidiaries of the
Company identified on Schedule 3.1(b) of the Company Disclosure Schedule or (ii)
as otherwise disclosed on Schedule 3.1(b) of the Company Disclosure Schedule.
(c) Each of the Company and its subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not be reasonably expected to have a Company Material Adverse
Effect. The term "COMPANY MATERIAL ADVERSE EFFECT" means any change or effect
that, individually or in the aggregate, is or is reasonably likely to be
materially adverse to the business, assets, operations, results of operations,
prospects (as identified in the Company's 2001 Preliminary Budget dated January
6, 2001 ("BUDGET")) or financial condition of the Company and its subsidiaries,
taken as whole, other than any changes or effects arising out of (i) conditions
generally affecting industries in which the Company operates,(ii) the entering
into or the public
6
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announcement or disclosure of this Agreement or the transactions contemplated
hereby, (iii) general economic conditions, or (iv) the financial markets.
SECTION 3.2 CAPITALIZATION OF THE COMPANY AND ITS
SUBSIDIARIES.
(a) The authorized capital stock of the Company consists of
100 million shares of capital stock, of which, as of January 16, 2001,
18,558,065 shares of Company Common Stock were issued and outstanding, and no
shares of Company Common Stock were held in the Company's treasury. All of the
outstanding shares of Company Common Stock have been validly issued and are
fully paid, nonassessable and free of preemptive rights. As of January 17, 2001,
1,724,856 shares of Company Common Stock were reserved for issuance pursuant to
outstanding Company Stock Options. Except as set forth in this Section 3.2, as
of January 17, 2001, there were outstanding (i) no shares of capital stock or
other voting securities of the Company, (ii) no stock appreciation rights,
phantom stock units, restricted stock grants, contingent stock grants or
Employee Plans which grant awards of any of the foregoing, and no other
outstanding contractual rights to which the Company is a party the value of
which is based on the value of Company Common Stock, (iii) no bonds, debentures,
notes or other indebtedness of the Company or any subsidiary having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of the Company may vote, (iv) no
securities of the Company or its subsidiaries convertible into or exchangeable
for shares of capital stock or voting securities of the Company, (v) no options
or other rights to acquire from the Company or its subsidiaries and, no
obligations of the Company or its subsidiaries to issue any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company and (iv) no equity equivalent
interests in the ownership or earnings of the Company or its subsidiaries
(collectively "COMPANY SECURITIES"). Section 3.2 of the Company Disclosure
Schedule lists each outstanding Company Stock Option, showing in each case the
exercise price, the number of shares of Company Common Stock into which each
such Company Stock Option is exercisable, and the expiration date of such
Company Stock Option. As of the date hereof, there are no outstanding
obligations of the Company or its subsidiaries to repurchase redeem or otherwise
acquire any Company Securities. There are no stockholder agreements, voting
trusts or other agreements or understandings to which the Company is a party or
by which it is bound relating to the voting or registration of any shares of
capital stock of the Company. To the knowledge of the Company, as of the date of
this Agreement, there are no irrevocable proxies and no voting agreements (other
than the Voting Agreement) with respect to any shares of capital stock or the
other voting securities of the Company to which the Company is a party.
(b) All of the outstanding capital stock of the Company's
subsidiaries (other than director's qualifying shares in the case of foreign
subsidiaries, each of which is set forth on section 3.2(b) of the Company
Disclosure Schedule) is owned by the Company, or one of its subsidiaries,
directly or indirectly, free and clear of any Lien or any other material
limitation or restriction (including any restriction on the right to vote or
sell the same except as may be provided as a matter of law). There are no
securities of the Company or its subsidiaries convertible into or exchangeable
for, no options or other rights to acquire from the Company or its subsidiaries
and no other contract, understanding, arrangement or obligation (whether or not
contingent) providing for, the issuance or sale, directly or indirectly, by the
Company or any of its subsidiaries of any capital stock or other ownership
interests in or any other securities of any
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subsidiary of the Company. There are no outstanding contractual obligations of
the Company or its subsidiaries to repurchase redeem or otherwise acquire any
outstanding shares of capital stock or other ownership interests in any
subsidiary of the Company. For purposes of this Agreement, "LIEN" means any
mortgage, lien, pledge, conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, reservation, restriction, security
interest, title retention or other security arrangement, or any adverse right or
interest, charge or claim of any nature whatsoever of, on, or with respect to,
any asset, property or property interest.
(c) The Company Common Stock constitutes the only class of
equity securities of the Company or its subsidiaries registered or required to
be registered under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT;
RECOMMENDATION.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby except the Stockholder Approval. This Agreement
has been duly and validly executed and delivered by the Company and, assuming
due authorization, execution and delivery by Parent and Acquisition, constitutes
a valid, legal and binding agreement of the Company enforceable against the
Company in accordance with its terms.
(b) The Board of Directors of the Company has unanimously
resolved to recommend that the stockholders of the Company approve and adopt
this Agreement.
SECTION 3.4 SEC REPORTS; FINANCIAL STATEMENTS. The Company has
filed all required forms, reports and documents ("COMPANY SEC REPORTS") with the
Securities and Exchange Commission (the "SEC") since December 31, 1998, each of
which has complied in all material respects with all applicable requirements of
the Securities Act of 1933, as amended, and the rules and regulations of the SEC
promulgated thereunder (the "SECURITIES ACT") and the Exchange Act, each as in
effect on the dates such forms, reports and documents were filed. None of such
Company SEC Reports contained when filed any untrue statement of a material fact
or omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein in light
of the circumstances under which they were made not misleading. The audited
consolidated financial statements of the Company included in the Company SEC
Reports and the unaudited financial statements contained in the Company's
quarterly report on Form 10-Q for the quarter ended September 30, 2000 have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated in the notes thereto), and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended, except, in the case of unaudited interim financial
statements, for normal year-end audit adjustments and the fact that certain
information and notes have been condensed or omitted in accordance with the
applicable rules of the SEC. Except as set forth on Section 3.4
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of the Company Disclosure Schedule and except as set forth in the Company SEC
Reports filed and publicly available prior to the date of this Agreement, and
except for liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the most recent
consolidated balance sheet included in the Company SEC Reports filed and
publicly available prior to the date of this Agreement and except for
liabilities and obligations which, individually or in the aggregate, would not
have a Company Material Adverse Effect, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise).
SECTION 3.5 INFORMATION SUPPLIED. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in the proxy statement (the "PROXY STATEMENT") relating to the meeting
of the Company's stockholders to be held in connection with the Merger (the
"COMPANY STOCKHOLDERS' MEETING") will, at the date the Proxy Statement or any
amendments or supplements thereto are mailed to stockholders of the Company or
at the time of the Company Stockholders' Meeting or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary, in order to make the statements
therein in light of the circumstances under which they are made, not misleading,
except that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Acquisition for inclusion or incorporation by reference
therein. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder.
SECTION 3.6 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as
set forth in Section 3.6 of the Company Disclosure Schedule, and except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, state securities
or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), foreign antitrust laws and the filing and recordation
of the articles of merger as required by the NRS, no filing with or notice to
and no permit, authorization, consent, order, license, certificate, declaration,
filing with or approval of any supranational, national, state, municipal, county
or local government, any instrumentality, subdivision, court, governmental,
regulatory, judicial or administrative agency or commission or other authority
thereof, any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental authority, or any
Gaming Authority (as defined below) (each, a "GOVERNMENTAL ENTITY") or other
person is necessary for the execution and delivery by the Company of this
Agreement or the consummation by the Company of the transactions contemplated
hereby, except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings or give such notice would not,
individually or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect or prevent or significantly delay consummation of the
transactions contemplated hereby. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation by the Company
of the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective Articles of Incorporation or Bylaws
(or similar governing documents) of the Company or any of its subsidiaries, (b)
result in a violation or breach of or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration or Lien) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
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contract, agreement or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which any of them or any of their
respective properties or assets may be bound and which contemplates a payment to
or from the Company in any twelve month period of an amount in excess of
$100,000 or (c) except as set forth in Section 3.6 of the Company Disclosure
Schedule, to the Company's knowledge, violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any of its
subsidiaries or any of their respective properties or assets except, in the case
of (b) or (c), for violations, breaches or defaults which, individually or in
the aggregate, would not be reasonably expected to have a Company Material
Adverse Effect. The term "GAMING AUTHORITY" means all foreign, federal, state,
local or supranational governmental, regulatory or licensing authorities or the
National Indian Gaming Commission, or other aboriginal or tribal authority,
which issues or grants any License or approval or admits persons to any roll or
list, necessary or appropriate for the lawful operation of gaming and related
businesses and operations engaged in by the Company or its subsidiaries. The
term "LICENSE" means a license, registration, finding of suitability, permit,
order, consent or other regulatory approval necessary for the lawful operation
or conduct of gaming, manufacturing, distributing and related business or
businesses (including specific contractual relations) engaged in by the Company
or any subsidiary in any jurisdiction issued or given by a Gaming Authority or
Governmental Entity.
SECTION 3.7 NO DEFAULT. None of the Company or its
subsidiaries is in breach, default or violation (and no event has occurred which
with notice or the lapse of time or both would constitute a breach default or
violation) of any term, condition or provision of (a) its Articles of
Incorporation or Bylaws (or similar governing documents), (b) any Company
Material Contract or Company Permit (as hereinafter defined) or (c) any order,
writ, injunction, decree, law, statute, rule or regulation of any Governmental
Entity applicable to the Company or any of its subsidiaries or any of their
respective properties or assets except, in the case of (b) or (c), for
violations, breaches or defaults that would not individually or in the
aggregate, be reasonably expected to have a Company Material Adverse Effect or
prevent or significantly delay consummation of the transactions contemplated
hereby.
SECTION 3.8 ABSENCE OF CHANGES. Since September 30, 2000,
there have been no events, changes or effects with respect to the Company or its
subsidiaries that would have a Company Material Adverse Effect or that are
outside the ordinary course of business.
SECTION 3.9 LITIGATION. Except as set forth on Section 3.9 of
the Company Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened (in
writing, with respect to matters other than Intellectual Property Rights, and,
to the Company's knowledge, whether or not in writing, with respect to
Intellectual Property Rights) against the Company or any of its subsidiaries or
any of their respective properties or assets before any Governmental Entity or
arbitrator which would be reasonably expected to result in costs, losses, fines,
penalties, settlements (payable in royalties or otherwise), awards, or other
financial damages to the Company, if determined adversely, in an amount of
$100,000 or more, result in an injunction preventing the company from offering
any current or presently contemplated products or services, or affect the
validity, enforceability or ownership of any Company Intellectual Property
Rights or would reasonably be expected to prevent or significantly delay the
consummation of the transactions contemplated by this Agreement. None of the
Company or its subsidiaries is subject to any outstanding order, writ,
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injunction or decree of any Governmental Entity that would have a Company
Material Adverse Effect or would reasonably be expected to prevent or
significantly delay the consummation of the transactions contemplated hereby.
SECTION 3.10 COMPLIANCE WITH APPLICABLE LAW.
(a) Except where the failure to hold the same, or the
invalidity or revocation thereof, would not have a Company Material Adverse
Effect, the Company and its subsidiaries hold all permits, Licenses, variances,
exemptions and approvals from all Governmental Entities necessary for the lawful
conduct of their respective businesses as presently conducted, (the "COMPANY
PERMITS") all of which are valid and in full force and effect, subject to any
conditions or limitations imposed by any such authority, and no notice of
revocation or suspension has been received or, to the knowledge of the Company,
is pending or threatened in writing in respect thereof and no event has occurred
which permits, or upon the giving of notice or passage of time or both would
permit, revocation, non-renewal, modification, suspension, limitation or
termination of any Company Permit that currently is in effect. The Company and
its subsidiaries are in compliance with the terms of the Company Permits except
where the failure so to comply would not, individually or in the aggregate, be
reasonably expected to have a Company Material Adverse Effect or prevent or
significantly delay the consummation of the transactions contemplated hereby.
(b) The businesses of the Company and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except that no representation or warranty is made in this
Section 3.10 with respect to Environmental Laws (as defined in Section 3.12
below) and except for violations or possible violations which would not,
individually or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect, and PROVIDED HOWEVER that certain such Company Permits
as are listed in Section 3.10(b) of the Company Disclosure Schedule are in the
process of being renewed. To the knowledge of the Company and its subsidiaries,
no investigation or review by any Governmental Entity with respect to the
Company or its subsidiaries is pending or threatened, nor to the knowledge of
the Company and its subsidiaries, has any Governmental Entity indicated an
intention to conduct the same, other than such investigations or reviews as
would not be reasonably expected to have a Company Material Adverse Effect.
(c) The Company and its subsidiaries are currently operating
in substantial compliance with the terms of all Company Permits issued by Gaming
Authorities, and to the extent there has not been such compliance in the past
all such non-compliances have been rectified. No Gaming Authority is restricting
or prohibiting the continuation of the business of the Company or any of the
Company's subsidiaries as presently conducted through any order, decree or
otherwise. Except as disclosed in Section 3.10(c) of the Company's Disclosure
Schedule, (i) neither the Company nor any of its subsidiaries, nor any director,
officer, key employee, person performing management functions similar to
officers or, to the Company's knowledge, partners of the Company or any of its
subsidiaries has received any written claim, demand notice, complaint, court
order or administrative order from any Governmental Entity in the past three
years under or relating to any violation or possible violation of any Gaming
Laws (as defined below) which did or would be reasonably likely to result in
fines or penalties of $50,000 or more; (ii) to the knowledge of the Company,
there are no facts which, if known to the
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Gaming Authorities under the Gaming Laws, could reasonably be expected to result
in the revocation, limitation or suspension of a Company Permit, or any officer,
director, key employee, other person performing management functions similar to
an officer or partner, under any Gaming Laws and neither the Company nor any of
its subsidiaries has any reason to believe that any Gaming Authority is
considering, or has any basis for, restricting or prohibiting the continuation
of the business of the Company or any of its subsidiaries as presently conducted
through any order, decree or otherwise, and (iii) neither the Company nor any of
its subsidiaries has suffered a suspension or revocation of any Company Permit
held under or pursuant to the Gaming Laws. The term "Gaming Laws" means any law,
statute, ordinance, rule, regulation, License, judgment, order, decree,
injunction or other authorization of a Governmental Entity, including any
condition or limitation placed thereon, governing or relating to the current or
contemplated casino, gaming and related manufacturing and distributing
activities and operations of the Company or any of its subsidiaries.
SECTION 3.11 EMPLOYEE BENEFIT PLANS; LABOR MATTERS.
(a) Section 3.11(a) contains a true and complete list of each
deferred compensation and each incentive compensation, stock purchase, stock
option and other equity compensation plan, program, agreement or arrangement;
each severance or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); each profit-sharing, stock bonus or other "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA); each employment,
termination or severance agreement; and each other employee benefit plan, fund,
program, agreement or arrangement, in each case, that is sponsored, maintained
or contributed to or required to be contributed to by the Company or by any
trade or business, whether or not incorporated (an "ERISA AFFILIATE"), that
together with the Company would be deemed a "single employer" within the meaning
of section 4001(b) of ERISA, or to which the Company or an ERISA Affiliate is
party, whether written or oral, for the benefit of any employee or former
employee of the Company or any subsidiary (the "EMPLOYEE Plans"). Neither the
Company nor any ERISA Affiliate has any legally binding commitment to create any
additional employee benefit plan or modify or change any existing Employee Plan
that would affect any employee or former employee of the Company or any
subsidiary.
(b) With respect to each Employee Plan, the Company has
heretofore delivered to Parent true and complete copies of the Employee Plan and
any amendments thereto (or if the Employee Plan is not a written Employee Plan,
a description thereof), any related trust or other funding vehicle, any reports
or summaries required under ERISA or the Code and the most recent determination
letter received from the Internal Revenue Service with respect to each Employee
Plan intended to qualify under section 401 of the Internal Revenue Code of 1986,
as amended (the "CODE").
(c) None of the Employee Plans is a "multiemployer plan," as
such term is defined in Section 3(37) of ERISA, nor is any Employee Plan subject
to 302 or Title IV of ERISA or Section 412 of the Code. No liability under Title
IV or section 302 of ERISA has been incurred by the Company or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to the Company or any ERISA Affiliate of incurring
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any such liability, other than liability for premiums due the Pension Benefit
Guaranty Corporation ("PBGC") (which premiums have been paid when due).
(d) Neither the Company or any subsidiary, any Employee Plan,
any trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or any subsidiary,
any Employee Plan, any such trust, or any trustee or administrator thereof, or
any party dealing with any Employee Plan or any such trust could be subject to
either a material civil penalty assessed pursuant to section 409 or 502(i) of
ERISA or a material tax imposed pursuant to section 4975 or 4976 of the Code.
(e) Each Employee Plan has been operated and administered in
all material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code.
(f) Each Employee Plan intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under section 501(a) of the Code. Each
Employee Plan intended to satisfy the requirements of Section 501(c)(9) has
satisfied such requirements.
(g) No Employee Plan provides medical, surgical,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any subsidiary for periods
extending beyond their retirement or other termination of service, other than
(i) coverage mandated by applicable law, (ii) death benefits under any "pension
plan," or (iii) benefits the full cost of which is borne by the current or
former employee (or his beneficiary).
(h) Except as disclosed in Section 3.11(h) of the Company
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such employee
or officer.
(i) There are no pending, threatened or anticipated claims of
a material nature by or on behalf of any Employee Plan, by any employee or
beneficiary covered under any such Employee Plan, or otherwise involving any
such Employee Plan (other than routine claims for benefits).
(j) There are no material controversies pending or, to the
knowledge of the Company, threatened between the Company or any of its
subsidiaries and any of their respective employees. Section 3.11(j) of the
Company Disclosure Schedule lists each collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or its
subsidiaries in the United States. The Company has no knowledge of any material
activities or proceedings of any labor union to organize any employees of the
Company or its subsidiaries. The Company has no knowledge of any material
strikes, slowdowns, work stoppages, lockouts or threats thereof by or with
respect to any employees of the Company or any of its subsidiaries.
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SECTION 3.12 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, the Company and each of its subsidiaries is in full
compliance with all applicable Environmental Laws, which compliance includes,
but is not limited to, the possession by the Company and its subsidiaries of all
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. Except
as set forth in Section 3.12 of the Company Disclosure Schedule, neither the
Company nor any of its subsidiaries has received any communication (written or
oral), whether from a governmental authority, citizens group, employee or
otherwise, that alleges that the Company or any of its subsidiaries is not in
such full compliance. All permits and other governmental authorizations
currently held by the Company or any of its subsidiaries pursuant to the
Environmental Laws are identified in Section 3.12 of the Company Disclosure
Schedule.
(b) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, there is no Environmental Claim pending or threatened
against the Company or any of its subsidiaries or, to the knowledge of the
Company and its subsidiaries, against any person or entity whose liability for
any Environmental Claim the Company or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law.
(c) Except as set forth in Section 3.12 of the Company
Disclosure Schedule, there are no past or present actions, activities,
circumstances, conditions, events or incidents involving the release, emission,
discharge, presence or disposal of any Material of Environmental Concern that
could reasonably form the basis of any Environmental Claim against the Company
or any of its subsidiaries or, to the knowledge of the Company and its
subsidiaries, against any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law.
(d) Without in any way limiting the generality of the
foregoing, (i) all underground storage tanks, and the capacity and contents of
such tanks, located on property owned, operated, or leased by the Company or any
of its subsidiaries are identified in Section 3.12 of the Company Disclosure
Schedule, and (ii) all properties formerly owned or operated by the Company, or
any subsidiary, affiliate, or predecessor thereof are identified in Section 3.12
of the Company Disclosure Schedule.
For purposes of this Agreement, the following terms shall have
the following meanings:
"Environmental Claim" means any claim, action, cause of
action, investigation or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or any of its subsidiaries or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
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"Environmental Laws" means all federal, interstate, state,
local and foreign laws and regulations relating to pollution or protection of
human health, safety, or the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
radioactive materials, asbestos, petroleum and petroleum products.
SECTION 3.13 TAXES.
(a) DEFINITIONS. For purposes of this Agreement:
(i) the term "INCOME TAX" shall mean any federal,
state, local or foreign Tax (A) based upon, measured by, or calculated with
respect to net income or profits (including capital gains Taxes, alternative
minimum Taxes and Taxes on items of Tax preference), or (B) based upon, measured
by, or calculated with respect to multiple bases (including corporate franchise
Taxes), if one or more of the principal bases on which such Tax may be based,
measured by, or calculated with respect to is described in clause (a)(i)(A).
(ii) the term "TAX" (including "TAXES") means (A)
all federal, state, local, foreign and other net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, withholding, estimated, payroll, employment, excise,
severance, stamp, occupation, premium, property, windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts with respect thereto, (B) any liability for payment of amounts described
in clause (a)(ii)(A) whether as a result of transferee liability, of being a
member of an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law, and (C) any liability for the payment of
amounts described in clauses (a)(ii)(A) or (B) as a result of any tax sharing,
tax indemnity or tax allocation agreement or any other express or implied
agreement to indemnify any other person; and
(iii) the term "TAX RETURN" means any return,
declaration, report, statement, information statement and other document
required to be filed with respect to Taxes.
(b) The Company and its subsidiaries have timely filed (taking
into account extensions) all material Income Tax Returns they are required to
have filed. All Income Tax Returns filed by the Company and its subsidiaries are
accurate, complete and correct in all material respects.
(c) The Company and its subsidiaries have timely paid all
material Income Taxes that have become due or payable (other than Taxes being
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles) and have adequately
reserved for in accordance with generally accepted accounting
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principles all material Income Taxes (whether or not shown on any Tax Return)
that have accrued but are not yet due or payable.
(d) No claim for assessment or collection of material Income
Taxes is presently being asserted against the Company or its subsidiaries and
there is no presently pending audit examination, refund claim, litigation,
proceeding, proposed adjustment or matter in controversy with respect to any
material Income Taxes due and owing by the Company or any of its subsidiaries.
(e) Neither the Company nor any subsidiary of the Company has
filed any waiver of the statute of limitations applicable to the assessment or
collection of any Income Tax or any other material Tax which remains open.
(f) Neither the Company nor any subsidiary of the Company is a
party to any tax indemnity agreement, tax sharing agreement, or other agreement
under which it reasonably expects to become liable to another person as a result
of the imposition of a material Income Tax upon any person, or the assessment or
collection of such a Tax.
(g) The Company and each of its subsidiaries have complied in
all material respects with all rules and regulations relating to the withholding
of Income Taxes.
(h) The representations contained in subparagraphs (b) through
(d) and subparagraphs (f) and (g) hereof are true and correct with respect to
all Taxes other than Income Taxes and all Tax Returns with respect to Taxes
other than Income Taxes, as applicable, except for such failures that would not
be material.
(i) Neither the Company nor any of its subsidiaries is a party
to any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in connection with this Agreement or any
change of control of the Company or any of its subsidiaries, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
(j) The Company is not and has not been a United States real
property holding company within the meaning of Section 897(c)(2) of the Code.
SECTION 3.14 INTELLECTUAL PROPERTY.
(a) DEFINITIONS. (i)For purposes of this Agreement
"INTELLECTUAL PROPERTY" shall mean all proprietary rights and other
rights in and to: (i) trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, including all applications for registration
thereof and all renewals, modifications and extensions thereof
("TRADEMARKS") and the goodwill associated with each of the foregoing;
(ii) patents, including design patents and utility patents, reissues,
divisions, continuations-in-part and extensions thereof, in each case
including all applications therefor ("PATENTS"); (iii) inventor's
certifications and invention disclosures; (iv) works of authorship,
including computer systems, programs, software, object and source code,
databases, algorithms and documentation therefor, whether copyrightable
or not, copyrights, copyright registrations and applications of
registration
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of copyrights and all renewals, modifications and extensions thereof,
moral rights and design rights ("COPYRIGHTS"); (v) trade secrets and
other protectable information, including ideas, formulas, compositions,
technical documentation, operating manuals and guides, plans, designs,
sketches, inventions, product specifications, engineering reports and
drawings, manufacturing and production processes and techniques;
drawings, specifications, research records, invention records and
technical data; and all other know-how, protected by patent, copyright
or trade secret law; (vi) registrations of, and applications to
register, any of the foregoing with any governmental authority and any
renewals or extensions thereof; (vii) domain names; and (viii) any
claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing, in each case
in any jurisdiction.
(ii) For purposes of this Section 3.14, "MATERIAL
ADVERSE INTELLECTUAL PROPERTY EFFECT" shall mean, with reference to a
particular event or condition, that the occurrence or non-occurrence of
such event or the absence or existence of such condition or, with
reference to a suit, claim, action, proceeding or investigation against
the Company or any of its subsidiaires, that an adverse result would
reasonably be expected to result in costs, losses, fines, penalties,
settlements (payable in royalties or otherwise), awards, or other
financial damages to the Company in an amount equal to or reasonably
valued at $100,000 or more, or reasonably be expected to prevent or
significantly delay the consummation of the transactions contemplated
by this Agreement, or that otherwise has a material adverse effect on
the Company.
(b) The Company is the sole and exclusive owner of all
Intellectual Property used in the business of the Company or any of its
subsidiaries as currently conducted that is not owned by and licensed from third
parties. The Company has the valid right to use all Intellectual Property used
in the business of the Company or any of its subsidiaries as currently conducted
that is not exclusively owned by the Company, excluding any Intellectual
Property that, if not owned by the Company or subject to a valid license in
favor of the Company, would not individually or in the aggregate have a Material
Adverse Intellectual Property Effect on the Company.
(c) None of the Intellectual Property owned by the Company or
any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY RIGHTS"), or to the
Company's knowledge, used by or licensed to the Company or any of its
subsidiaries, is subject to any outstanding judgment, order, decree,
stipulation, injunction or charge. To the Company's knowledge, there is no claim
pending or threatened which challenges the legality, validity, enforceability,
or any of the Company's or any of its subsidiaries' use or ownership of, any of
the Company Intellectual Property Rights or any of the Intellectual Property
licensed to the Company or any of its subsidiaries, excluding any such claim(s)
that would not individually or in the aggregate have a Material Adverse
Intellectual Property Effect on the Company. None of the Company or any of its
subsidiaries have agreed to indemnify any person for or against any
interference, infringement, misappropriation or other conflict with respect to
any Intellectual Property, except as may be contained within the licenses or
sale agreements, entered into by the Company in the ordinary course of business
in connection with sales of the Company's products, or as set forth in Section
3.14(c) of the Company Disclosure Schedule.
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(d) To the Company's knowledge, no breach or default (or event
which with notice or lapse of time or both would result in an event of default)
by the Company or any of its subsidiaries exists or has occurred under any
license or other agreement pursuant to which the Company or any of its
subsidiaries uses any Intellectual Property owned by a third party or has
granted any third party the right to use its Intellectual Property, and the
consummation of the transactions contemplated by this Agreement will not violate
or conflict with, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) or result in a forfeiture
under, or constitute a basis for termination of any such license or other
agreement, excluding any violation(s) or conflict(s) that individually or in the
aggregate would not have a Material Adverse Intellectual Property Effect on the
Company.
(e) To the Company's knowledge, the Company or its
subsidiaries owns or has the right to use all items of Intellectual Property
necessary to provide, produce, sell and license the services and products
currently provided, produced, sold and licensed by the Company and its
subsidiaries and to conduct the business of Company and its subsidiaries as
currently conducted, free and clear of all Liens, excluding any items that, if
not owned by the Company and not subject to a valid license in favor of the
Company, would not individually or in the aggregate have a Material Adverse
Intellectual Property Effect on the Company.
(f) To the Company's knowledge, the conduct of the Company's
and its subsidiaries' business, the Intellectual Property owned or used by the
Company and its subsidiaries, and the products or services produced, sold or
licensed by the Company and its subsidiaries, do not infringe any Intellectual
Property rights or any other proprietary right of any person or give rise to any
claim or obligations to any person as a result of co-authorship,
co-inventorship, or an express or implied contract for any use or transfer,
excluding any infringement(s), claim(s) or obligation(s) that would not
individually or in the aggregate have a Material Adverse Intellectual Property
Effect on the Company. None of the Company or its subsidiaries have received any
notice of any written allegations or written threats that the Company's or its
subsidiaries' use of any of the Intellectual Property infringes upon or is in
conflict with any Intellectual Property or proprietary rights of any other
person.
(g) None of the Company or its subsidiaries have sent or
otherwise communicated to any other person or entity in the twenty-four month
period prior to the date hereof any written claim of any present, impending or
threatened infringement of any Intellectual Property of the Company or any of
its subsidiaries.
(h) To the Company's knowledge, none of the Company's or its
subsidiaries' products or services incorporate, are based upon or are derived or
adapted from, any Intellectual Property of any other person in violation of any
statutory or other legal obligation or any agreement to which the Company or any
of its subsidiaries is a party or by which it is bound, excluding any
violation(s) that individually or in the aggregate would not have a Material
Adverse Intellectual Property Effect on the Company.
(i) To the knowledge of the Company, all of Company's Patents,
Trademarks and Copyrights issued by, registered with or filed with the United
States Patent and Trademark Office or Register of Copyrights or the
corresponding offices of other countries and material to the business of the
Company as currently conducted have been duly registered, filed in or issued,
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as the case may be, have been properly maintained and renewed in accordance with
all applicable provisions of law and administrative regulations, and the Company
or its subsidiary is the record owner thereof. The Company has used commercially
reasonable efforts to maintain the confidentiality of its trade secrets and
other confidential Intellectual Property in accordance with industry standards,
and, to the Company's knowledge, there have been no acts or omissions by the
Company, the result of which would be to compromise the rights of the Company to
apply for, obtain or enforce appropriate legal protection of such Intellectual
Property, excluding any loss(es) or compromise(s) of rights that individually or
in the aggregate would not have a Material Adverse Intellectual Property Effect
on the Company.
(j) To the Company's knowledge, no present or former employee,
officer, or independent contractors of the Company or any of its subsidiaries
has any right, title or interest, directly or indirectly, in whole or in part,
in any of the Company Intellectual Property Rights, and no current or former
employee(s), officer(s) or independent contractor(s) of the Company or any of
its subsidiaries have asserted any claim, or have any valid claim or valid
right, to any of the Company Intellectual Property Rights, which claim(s) or
right(s) would independently or in the aggregate have a Material Adverse Effect
on the Company. To the Company's knowledge, no employee, officer or agent of the
Company or any of its subsidiaries is a party to or otherwise bound by any
agreement with or obligated to any other person or entity (including, any former
employer) which conflicts in any material respect with any obligation or
commitment of such employee, officer or agent to the Company under any agreement
to which he or she is a party or otherwise. To the Company's knowledge, each
current and former employee, officer, agent and each independent contractor that
developed any Company Intellectual Property is obligated to transfer to the
Company, and will be obligated to transfer to the Surviving Company any patent
applications and invention disclosures, in consideration for no more than normal
salary and continued employment or consultant fees, as the case may be, all
inventions, developments and work product which during his or her employment or
consultancy with the Company or any of its subsidiaries, such employee, officer,
agent or independent contractor made or makes that related or relates to any
subject matter with which such employee's, officer's, agent's or independent
contractor's work for the Company or any of its subsidiaries was concerned and
which were made during such persons employment or course of agency as the case
may be.
(k) To the knowledge of the Company, the consummation of the
transactions contemplated by this Agreement will not result in the loss or
impairment of any Company Intellectual Property Rights, excluding any loss or
impairment that individually or in the aggregate would not have a Material
Adverse Intellectual Property Effect on the Company.
(l) Section 3.14(l) of the Company Disclosure Schedule sets
forth a complete and accurate list of all existing material agreements granting
to third parties any material right to use or practice any material rights under
the Company Intellectual Property Rights, excluding any non-exclusive licenses
granted to customers in the ordinary course of business.
SECTION 3.15 VOTE REQUIRED. The Stockholder Approval is the
only vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the Merger.
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SECTION 3.16 OPINION OF FINANCIAL ADVISER. Wasserstein Perella
& Co., Inc. (the "COMPANY FINANCIAL ADVISER") has delivered to the Board of
Directors of the Company its written opinion dated the date of this Agreement to
the effect that as of such date the Merger Consideration is fair to the holders
of shares of Company Common Stock from a financial point of view (the
"OPINION"). True and complete copies of the Opinion and the letter of engagement
between the Company and the Company Financial Adviser pursuant to which the
Company Financial Adviser has issued the Opinion and acted as financial adviser
to the Company with respect to the transactions contemplated by this Agreement
have been delivered to Parent on or prior to the date hereof.
SECTION 3.17 BROKERS. No broker, finder or investment banker
other than the Company Financial Adviser is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
SECTION 3.18 PROPERTY.
(a) The Company and each of its subsidiaries has good, valid
and marketable fee title to all of the real property and assets which it
purports to own (the "OWNED PROPERTY"). Each Owned Property is free of all Liens
except for (i) those Liens which are disclosed on title commitments or reports
delivered to Parent prior to the date hereof, (ii) those matters set forth on
Section 3.18(a) of the Company Disclosure Schedule, (iii) Liens for taxes not
yet due and payable, or (iv) Liens which could not, individually, or in the
aggregate, reasonably be expected to materially impair the current use,
occupancy, value, financeability or marketability of title to the Real Property
on a property-by-property basis. The Owned Property and the Leased Property (as
defined below) constitute all such property necessary to permit the Company and
each of its subsidiaries to conduct, and continue to conduct, its business as
currently conducted in all material respects and the consummation of the
transactions contemplated hereby will not alter or impair such ability in any
material respect.
(b) Section 3.18(b) of the Company Disclosure Schedule
contains an accurate and complete list of all leases (the "LEASES") (setting
forth the address of the premises demised thereunder, the lessor and the lessee
(and any sublessor or sublessee, as appropriate)) pursuant to which the Company
and each of its subsidiaries leases real or personal property (the "LEASED
PROPERTY"). The Company and each of its subsidiaries holds good and valid
leasehold title to all of the Leased Property. All of the Leases are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect, and there are no existing defaults by the Company or any of its
subsidiaries thereunder; no event of default has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any other event)
would constitute a default thereunder, except in any such case where the
invalidity or default would not have a Company Material Adverse Effect. Except
as set forth on Section 3.18(b) of the Company Disclosure Schedule all lessors
under such Leases have consented (where such consent is necessary) to the
consummation of the transactions contemplated herein without requiring
modification in the rights or obligations of the lessee under such Leases. The
Company or its subsidiaries have delivered true, correct and complete copies of
all of the Leases.
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SECTION 3.19 CONTRACTS. (a) Except as set forth in the
Company's SEC Reports or Section 3.19 of the Company Disclosure Schedule,
neither the Company nor any of its subsidiaries is a party to or bound by (i)
any "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC), (ii) any non-competition agreement or any other
agreement or obligation which purports to limit in any respect the manner in
which, or the localities in which, all or any material portion of the business
of the Company and its subsidiaries, taken as a whole, may be conducted, (iii)
any transaction, agreement, arrangement or understanding with any Affiliate (as
defined in Rule 12b-2 of the Exchange Act) that would be required to be
disclosed under Item 404 of regulation S-K under the Securities Act, (iv) any
voting or other agreement governing how any Company Common Stock shall be voted,
(v) any material agreement with any stockholders of the Company, (vi) any
acquisition, merger, asset purchase or sale agreement (all contracts of the type
described in clauses (i) - (vi) being referred to herein as "Company Material
Contracts"). Each Company Material Contract is valid and binding on the Company
(or, to the extent a subsidiary of the Company is a party, such subsidiary) and
is in full force and effect, and the Company and each subsidiary of the Company
have, in all material respects, performed all obligations required to be
performed by them to date under each Company Material Contract, except where
such noncompliance, individually or in the aggregate, would not have a Company
Material Adverse Effect. Neither the Company nor any subsidiary of the Company
has received written notice of any violation or default under (nor, to the
knowledge of the Company, is there any existing condition which with the passage
of time or the giving of notice or both would result in such a violation or
default under) any Company Material Contract.
SECTION 3.20 STATE TAKEOVER STATUTES. The Company's Board of
Directors has approved this Agreement and the transactions contemplated hereby
and has taken all action required at this time such that the limitations on
control share acquisitions and business combinations contained in Sections
78.378 through 78.3793 inclusive and Sections 78.411 through 78.444 inclusive of
the NRS (and any similar provisions) are inapplicable to this Agreement, the
Voting Agreement and the transactions contemplated hereby and thereby. No other
"fair price," "merger moratorium," "control share acquisition" or other
anti-takeover statute or similar statute or regulation applies or purports to
apply to this Agreement or any of the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION
Except as publicly disclosed by Parent in the Parent SEC
Reports and except as set forth on the Disclosure Schedule (it being agreed that
disclosure of any item in such schedule shall be deemed disclosure with respect
to any section of this Agreement) previously delivered by Parent to the Company
(the "PARENT DISCLOSURE SCHEDULE"), Parent and Acquisition hereby represent and
warrant to the Company as follows:
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SECTION 4.1 ORGANIZATION.
(a) Each of Parent and Acquisition is duly organized, validly
existing and in good standing under the laws of its respective state of
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its businesses as now being
conducted. Parent has heretofore delivered to the Company accurate and complete
copies of the Constitution (or equivalent organizational documents) or
Certificate of Incorporation and Bylaws, as the case may be, as currently in
effect of Parent and Acquisition.
(b) Each of Parent and Acquisition is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Parent Material Adverse Effect. The term "PARENT
MATERIAL ADVERSE EFFECT" means any changes or effects that, individually or in
the aggregate, are materially adverse to the ability of Parent and Acquisition
to consummate the transactions contemplated hereby, other than any changes or
effects arising out of (i) conditions generally affecting industries in which
Parent operates or (ii) the entering into or the public announcement or
disclosure of this Agreement or the transactions contemplated hereby.
SECTION 4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of
Parent and Acquisition has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent and
the consummation by Parent of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action of Parent and
Acquisition and by Parent as the sole stockholder of Acquisition and no other
corporate proceedings on the part of Parent or Acquisition are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Parent and Acquisition and, assuming due authorization, execution and delivery
by the Company, constitutes a valid, legal and binding agreement of each of
Parent and Acquisition enforceable against each of Parent and Acquisition in
accordance with its terms.
SECTION 4.3 INFORMATION SUPPLIED. None of the information
supplied by Parent or Acquisition in writing for inclusion in the Proxy
Statement will, at the time that the Proxy Statement is mailed to the Company's
stockholders or at the time of the Company Stockholders' Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation or warranty is made by Parent with respect to statements
made or incorporated by reference therein based on information supplied by the
Company for inclusion or incorporation by reference therein.
SECTION 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as
set forth in Section 4.4 of the Parent Disclosure Schedule, and except for
filings, permits, authorizations, consents and approvals as may be required
under and other applicable requirements of the Exchange Act, Gaming Laws, the
HSR Act, the Exon-Florio Amendment to the Omnibus Trade
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and Competitiveness Act of 1988, as amended, or any successor thereto, foreign
antitrust laws and the filing and recordation of the articles of merger as
required by the NRS, no filing with or notice to, and no permit authorization,
consent or approval of, any Governmental Entity is necessary for the execution
and delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Parent Material Adverse
Effect. Neither the execution, delivery and performance of this Agreement by
Parent or Acquisition nor the consummation by Parent or Acquisition of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the respective Constitution (or equivalent organizational
documents) or Certificate of Incorporation or Bylaws, as the case may be, of
Parent or Acquisition or any of Parent's other subsidiaries, (b) to Parent's
knowledge, violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to Parent or Acquisition or any of Parent's other
subsidiaries or any of their respective properties or assets except, in the case
of (b), for violations, breaches or defaults which would not have a Parent
Material Adverse Effect.
SECTION 4.5 ADEQUATE FUNDS. Parent will have at the Effective
Time sufficient funds for the payment of the aggregate Merger Consideration.
SECTION 4.6 NO PRIOR ACTIVITIES. Except for obligations
incurred in connection with its incorporation or organization or the negotiation
and consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any person.
SECTION 4.7 OWNERSHIP OF SECURITIES. As of the date hereof,
neither Parent nor, to Parent's knowledge, any of the affiliates or associates
(as such terms are defined under the Exchange Act), (i) beneficially owns,
directly or indirectly, or (ii) is party to an agreement, arrangement or
understanding (other than this Agreement) for the purpose of acquiring, holding
or disposing of, in each case, shares of Company Common Stock.
SECTION 4.8 FINANCIAL STATEMENTS. The audited consolidated
financial statements of Parent, together with the notes thereto, filed by Parent
with the Australian Stock Exchange since January 1, 2000 (the "PARENT FINANCIAL
STATEMENTS") present fairly in all material respects the financial position of
Parent and its consolidated subsidiaries at the dates indicated, and the
statement of operations and cash flows of Parent and its consolidated
subsidiaries for the periods specified; except as otherwise disclosed in the
Parent Financial statements, the Parent Financial Statements have been prepared
in conformity with generally accepted accounting principles in Australia applied
on a consistent basis throughout the periods involved.
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ARTICLE V
COVENANTS
SECTION 5.1 CONDUCT OF BUSINESS.
(a) CONDUCT OF BUSINESS BY THE COMPANY. Except as expressly
set forth in this Agreement or as consented to in writing by Parent during
the period from the date of this Agreement to the Effective Time, the Company
shall, and shall cause its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course, consistent with past
practice and the Budget and in compliance in all material respects with all
applicable laws and regulations, and use all reasonable best efforts to (i)
preserve intact their current business organizations, (ii) keep available the
services of their current officers and employees and (iii) preserve their
relationships consistent with past practice with customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them.
(b) NEGATIVE COVENANTS. Without limiting the generality of the
foregoing, and except as expressly set forth in this Agreement or as consented
to in writing by Parent (which consent will not be unreasonably withheld or
delayed) between the date of this Agreement and the Effective Time or until the
earlier termination of this Agreement pursuant to its terms, the Company shall
not, and shall not permit any of its subsidiaries to:
(i) amend its articles of incorporation or Bylaws
(or other similar governing instrument);
(ii) authorize for issuance, issue, sell, deliver,
grant, dispose of or amend or agree or commit to any of the foregoing (whether
through the issuance or granting of options, warrants, calls, commitments,
subscriptions, rights to purchase, convertible or exchangeable securities or
otherwise) any stock of any class or any other securities or equity equivalents
(including, without limitation, any stock options or stock appreciation rights),
except for the issuance of shares of Company Common Stock pursuant to options
previously granted, or subsequently granted with an exercise price at fair
market value and in the ordinary course consistent with past practice (as such
past practice is evidenced by the memorandum dated January 4, 1998, attached in
Section 5.1 of the Company Disclosure Schedule), under the Stock Option Plans;
(iii) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, make any other actual, constructive or deemed distribution in
respect of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or purchase, redeem or otherwise acquire or amend the
terms of any of its securities or any securities of any of its subsidiaries or
any rights, warrants, options to acquire or any securities convertible into or
exchangeable for any such securities;
(iv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of Company or any of its subsidiaries (other than the Merger);
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(v) alter, through merger, liquidation,
reorganization, restructuring or any other fashion, the corporate structure or
ownership of any subsidiary;
(vi) except as set forth in Section 5.1(b)(vi) of the
Company Disclosure Schedule, (A) incur or assume any long-term or short-term
debt or issue or sell any debt securities or warrants or other rights to acquire
any debt securities of the Company or any of its subsidiaries, except for
working capital borrowings under existing lines of credit in the ordinary course
of business consistent with past practice, in an amount consistent with the
Budget in order to achieve the 2001 revenue plan contained therein, at any one
time outstanding; (B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person; (C) make any loans, advances or capital contributions to or
investments in any other person (other than to subsidiaries of Company or
customary loans or advances to customers, in each case in the ordinary course of
business consistent with past practice); (D) pledge or otherwise encumber shares
of capital stock or any other securities of Company or its subsidiaries; (E)
mortgage, pledge or otherwise encumber any of its properties or assets, tangible
or intangible, or create or suffer to exist any Lien thereupon; (F) amend,
modify or forgive any debt obligations of any person to the Company or its
subsidiaries; (G) enter into any "keep well" or other agreement to maintain any
financial statement condition of another person (not including such agreements
among the Company and its subsidiaries); or (H) enter into any arrangement
having the economic effect of any of the foregoing;
(vii) except as set forth in Section 5.1(b)(vii) of
the Company Disclosure Schedule or as may be required by law, enter into, adopt
or amend or terminate any Employee Plan in any manner or increase in any manner
the compensation payable or that may become payable to or fringe benefits of any
director, officer or employee (except, in the case of officers (other than
executive officers) and employees, in the ordinary course of business consistent
with past practice), agent consultant or person providing management services or
make any loans to any officers, directors, employees, affiliates, agents or
consultants or make any changes in its existing borrowing or lending
arrangements for or on behalf of any of such persons pursuant to an Employee
Plan or otherwise; pay or make any accrual or arrangement for payment of any
pension, retirement allowance or other employee benefit pursuant to any Employee
Plan to any officer, director, employee, consultant or affiliate or pay or agree
to pay or make any accrual or arrangement for payment to any officers,
directors, employees, consultants or Affiliates of the Company of any amount
relating to unused vacation days, except payments and accruals made in the
ordinary course of business consistent with past practice; adopt or pay, grant,
issue, accelerate or accrue salary or other payments or benefits pursuant to any
Employee Plan with or for the benefit of any director, officer, employee, agent
or consultant, whether past or present, other than as required under the terms
of any Employee Plans as in effect on the date hereof; or amend in any material
respect any Employee Plan in a manner inconsistent with the foregoing;
(viii) except (1) as set forth in Section
5.1(b)(viii) of the Company Disclosure Schedule or (2) purchases of inventory,
furnishings and equipment in the ordinary course of business consistent with the
Budget or (3) expenditures consistent with the Budget, acquire, sell, lease,
license, swap, barter, transfer, dispose of or otherwise convey any properties
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or assets, except transactions in the ordinary course of business, consistent
with past practice but in no event with an aggregate fair market value in excess
of $500,000;
(ix) except as may be required as a result of a
change in law or in generally accepted accounting principles, change any of the
accounting principles or practices used by it;
(x) except for standard audit adjustments, revalue
any of its assets, including without limitation writing down the value of
inventory or writing-off notes or accounts receivable other than in the ordinary
course of business;
(xi) (A) acquire or agree to acquire (by merger,
consolidation or acquisition of stock or assets or by any other manner) any
corporation, partnership, joint venture association or other business
organization or division thereof or any equity interest therein; (B) enter into
any contract or agreement, other than in the ordinary course of business
consistent with past practice, that would be material to Company and its
subsidiaries, taken as a whole; or (C) authorize any new capital expenditure or
expenditures that individually is in excess of $100,000, PROVIDED that none of
the foregoing shall limit any capital expenditure required pursuant to contracts
existing as of the date hereof and disclosed to Parent as of the date of this
Agreement, and except (1) as set forth in Section 5.1(b)(xi) of the Company
Disclosure Schedule or (2) purchases of inventory, furnishings and equipment in
the ordinary course of business consistent with past practice or (3)
expenditures consistent with the Budget;
(xii) except as set forth in Section 5.1(b)(xii) of
the Company Disclosure Schedule, make any Tax election, amend any Tax Return
(PROVIDED HOWEVER that the Company may amend any such Tax Return without consent
to either seek a refund or to pay additional tax in an amount up to $100,000, in
each case upon the advice of its outside tax professionals) or settle or
compromise any Tax liability material to Company and its subsidiaries taken as a
whole;
(xiii) enter into any collective bargaining
agreement;
(xiv) make any payments (other than regular
compensation payable to officers and employees in the ordinary course of
business consistent with past practice) or other distributions to, or enter into
any transaction, agreement or arrangement with, any of affiliates, officers,
directors, stockholders or their affiliates, associates or family members or do
or enter into any of the foregoing with respect to employees, agents or
consultants other than in the ordinary course of business consistent with past
practice;
(xv) modify, amend or terminate any Company Material
Contract or waive, release or assign any material rights or claims;
(xvi) fail to make any scheduled principal or
interest payment on indebtedness evidenced by debt instruments to which Company
or any of its subsidiaries is a party;
(xvii) except as set forth on Section 5.1(b)(xvii) of
the Company Disclosure Schedule, pay, discharge, settle, compromise or satisfy
any pending or threatened
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claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), (A) relating to the transactions contemplated hereby;
(B) described in the Company SEC Reports; (C) outside the ordinary course of
business consistent with past practice; or (D) involving an admission of
liability other than in accordance with the terms of liabilities reflected or
reserved against in the most recent consolidated balance sheet included in the
Company SEC Reports filed and publicly available prior to the date of this
Agreement.
(xviii) take any action that would reasonably be
expected to revoke, limit, suspend, terminate otherwise restrict or result in
the failure to have issued, rented or renewed, any Company Permit issuable by a
Gaming Authority or breach, violate, revoke a filing of suitability under or
otherwise fail to comply with any Gaming Law, or fail to take any action that
would reasonably be expected to prevent any of the foregoing consequences;
(xix) take any action that would result in any of its
representations and warranties set forth in this Agreement becoming untrue; or
(xx) authorize, take or commit or agree in writing or
otherwise to take any of the actions described in Section 5.1(b).
SECTION 5.2 OTHER POTENTIAL ACQUIRORS.
(a) The Company agrees that it shall not, nor shall it permit
any of its subsidiaries to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other advisor or
representative of, the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit or initiate, or encourage any inquiries regarding, or
the submission of, any Takeover Proposal, (ii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal (iii) enter into any agreement with respect to any Takeover
Proposal or approve or resolve to approve any Takeover Proposal or (iv) grant
any waiver or release under any Standstill or similar agreement; PROVIDED,
HOWEVER, that nothing in this Section 5.2 shall prevent the Company or its Board
of Directors from furnishing non-public information to, or entering into
discussions or negotiations with, a person that makes an unsolicited written
bona fide Takeover Proposal, if and only to the extent that (i) such person has
made a bona fide Takeover Proposal in writing to the Board of Directors of the
Company, (ii) the Board of Directors of the Company determines in good faith
that such proposal would, if so completed, result in a Superior Proposal (as
defined below), (iii) the Board of Directors of the Company, after consultation
with outside legal counsel, by a majority vote determines in good faith that the
failure to take such action would likely constitute a breach of its fiduciary
duties to the holders of Company Common Stock under applicable law, and (iv)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Board of Directors receives from
such person an executed confidentiality agreement in form and substance similar
to the Confidentiality Agreement dated December 11, 2000 between the Company and
Parent (the "CONFIDENTIALITY AGREEMENT").
(b) Upon execution of this Agreement, the Company will, and
will cause its subsidiaries to, and will cause their respective officers,
directors, employees, investment bankers,
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attorneys, and other advisors and representatives of the Company or any of its
subsidiaries to, cease and terminate any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any possible
Takeover Proposal.
(c) The Company will promptly (but in no case later than 48
hours) notify Parent of the existence of any proposal, discussion, negotiation
or inquiry received by the Company regarding any Takeover Proposal, and the
Company will promptly (but in no case later than 48 hours) communicate to Parent
the terms of any proposal, discussion, negotiation or inquiry which it may
receive regarding any Takeover Proposal (and will promptly, but in no case later
than 48 hours, provide to Parent copies of any written materials received by the
Company in connection with such proposal, discussion, negotiation or inquiry)
and the identity of the party making such proposal or inquiry or engaging in
such discussion or negotiation. The Company will promptly (but in no case later
than 48 hours) provide to Parent any non-public information concerning the
Company provided to any other person in connection with any Takeover Proposal
which was not previously provided to Parent. The Company will keep Parent
informed of the status and details of any such Takeover Proposal and of any
amendments or proposed amendments to any Takeover Proposal and will promptly
(but in no case later than 48 hours) notify Parent of any determination by the
Company's Board of Directors that a Superior Proposal has been made.
(d) Except as set forth in this Section 5.2(d), neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw,
modify or amend, or propose to withdraw, modify or amend, in a manner adverse to
Parent or Acquisition, the approval or recommendation by the Board of Directors
of the Company or any such committee of this Agreement or the Merger, (ii)
adopt, approve or recommend, or propose to adopt, approve or recommend, any
Takeover Proposal, (iii) enter into any agreement with respect to any Takeover
Proposal or (iv) resolve or agree to take any of the actions set forth in
clauses (i) through (iii). Notwithstanding the foregoing, subject to compliance
with the provisions of this Section 5.2, at any time prior to obtaining the
Stockholder Approval, the Board of Directors may (x) withdraw, modify or amend
its approval or recommendation of this Agreement or the Merger, (y) approve or
recommend an unsolicited written Superior Proposal, or (z) terminate this
Agreement pursuant to Section 7.2(i) hereof following the making of a
unsolicited written Superior Proposal, in each case, (1) if, and to the extent
the Board of Directors, based on the advice of outside legal counsel, by a
majority vote determines in good faith that the failure to take such action
would constitute a breach of its fiduciary duties to the holders of Company
Common Stock under applicable law, and (2) provided that, concurrently with any
such termination of this Agreement under clause (z) above, (a) the Company shall
enter into a definitive agreement with respect to such Superior Proposal and (b)
the Company shall pay the Termination Fee and Expenses in accordance with
Section 7.5 hereof.
(e) "TAKEOVER PROPOSAL" means any bona fide proposal or offer,
whether in writing or otherwise and whether or not delivered to the Company's
stockholders generally, from any person other than Parent, Acquisition or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as
determined pursuant to Rule 13d-3 under the Exchange Act) of all or a material
portion of the assets of the Company or any of its subsidiaries or 20% or more
of any class of equity securities of the Company or any of its subsidiaries
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender
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offer, exchange offer or similar transaction with respect to either the Company
or any of its subsidiaries, including any single or multi-step transaction or
series of related transactions, which is structured to permit such Third Party
to acquire beneficial ownership of any material portion of the assets of or 20%
or more of the equity interest in either the Company or any of its subsidiaries.
(f) "SUPERIOR PROPOSAL" means any bona fide proposal by a
Third Party to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than a majority of the shares of Company Common
Stock then outstanding or all or substantially all of the assets of the Company
or to acquire, directly or indirectly, the Company by merger or consolidation,
and otherwise on terms which the Board of Directors of the Company determines in
good faith to be more favorable to the Company's stockholders (taking into
account the time period reasonably believed necessary to consummate such
transaction) than the Merger (based on advice of the Company's independent
financial advisor that the value of the consideration provided for in such
proposal is superior to the value of the consideration provided for in the
Merger), for which financing, to the extent required, is then fully committed.
(g) Nothing contained herein shall prohibit the Company from
disclosing to its stockholders the position or statement contemplated by Rules
14d-9 or 14e-2(a) under the Exchange Act with respect to a Takeover Proposal by
means of a tender offer.
SECTION 5.3 PREPARATION OF THE PROXY STATEMENT; STOCKHOLDERS'
MEETING.
(a) As promptly as practicable after the execution of this
Agreement, and in no event later than 30 days after the date hereof, the Company
shall prepare and file with the SEC the Proxy Statement. The Company shall
obtain and furnish the information required to be included in the Proxy
Statement and shall respond promptly to any comments made by the SEC with
respect to the Proxy Statement and cause the Proxy Statement and form of proxy
to be mailed to the Company's stockholders at the earliest practicable date.
Parent shall cooperate in the preparation of the Proxy Statement and shall as
soon as practicable after the date hereof furnish the Company with all
information for inclusion in the Proxy Statement as the Company may reasonably
request. The Company agrees, as to information supplied by the Company, its
officers, directors, stockholders and subsidiaries contained in the Proxy
Statement, and Parent agrees, as to information supplied by Parent and its
officers, directors, stockholders and subsidiaries contained in the Proxy
Statement that such information, at the date the Proxy Statement is mailed, (as
amended or supplemented) at the time of the Company Stockholders Meeting and the
Effective Time, will not be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. Parent and its counsel shall be given the
reasonable opportunity to review the Proxy Statement and all amendments or
supplements thereof prior to their being filed with the SEC, and the Company
shall not make any such filing without consulting with Parent. The Company will
advise Parent, promptly after it receives notice thereof, of the time when the
Proxy Statement has been cleared by the SEC or any request by the SEC for an
amendment of the Proxy Statement or comments from the SEC thereon and proposed
responses thereto or requests by the SEC for additional information. The Company
shall also promptly provide Parent with copies of any correspondence received
from SEC, and shall permit representatives of Parent to participate in
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any telephone call with the SEC which discusses comments made by the staff. The
Company, on the one hand, and Parent, on the other hand, agree to promptly
correct any information provided by either of them for use in the Proxy
Statement if any, if and to the extent that it shall have become materially
false or misleading, and the Company further agrees to take all steps reasonably
necessary to cause the Proxy Statement as so corrected to be filed with the SEC
and to use all reasonable efforts to cause the Proxy Statement to be
disseminated to the Company's stockholders, in each case, as and to the extent
required by applicable laws.
(b) Parent agrees promptly to advise the Company if at any
time prior to the Company Stockholders' Meeting any information provided by it
in the Proxy Statement is or becomes incorrect or incomplete in any material
respect and to provide the Company with the information needed to correct such
inaccuracy or omission. Parent will furnish the Company with such supplemental
information as may be necessary in order to cause the Proxy Statement, insofar
as it relates to Parent and its subsidiaries, to comply with applicable law
after the mailing thereof to the stockholders of the Company.
(c) The Company agrees promptly to advise Parent if at any
time prior to the Company Stockholders' Meeting any information provided by it
in the Proxy Statement is or becomes incorrect or incomplete in any material
respect and to provide Parent with the information needed to correct such
inaccuracy or omission. The Company will furnish Parent with such supplemental
information as may be necessary in order to cause the Proxy Statement, insofar
as it relates to the Company and its subsidiaries, to comply with applicable law
after the mailing thereof to the stockholders of the Company.
(d) As soon as reasonably practicable following the date of
this Agreement, the Company shall duly call, give notice of, convene and hold
the Company Stockholders' Meeting for the purpose of obtaining the Stockholder
Approval. Subject to the fiduciary duties of its Board of Directors, the Company
shall use reasonable efforts to solicit proxies from its stockholders and to
secure the vote or consent of stockholders required by applicable law or
otherwise to obtain the Stockholder Approval. Subject to Section 5.2(d), the
Company, through its Board of Directors, shall recommend to its stockholders the
approval of this Agreement and the Merger.
SECTION 5.4 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Upon notice by Parent and permission by the Company, which
shall not be unreasonably withheld or delayed, the Company shall, and shall
cause its subsidiaries to, afford Parent, and the officers, employees,
accountants, counsel, financial advisors and other representatives of Parent,
reasonable access during normal business hours during the period prior to the
Effective Time, and in a manner reasonably designed to minimize disruption to
the operations of the Company, to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, the
Company shall, and shall cause each of its subsidiaries to, furnish promptly to
Parent, (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Except as required by
law, each of the Company and Parent will hold, and will cause its respective
officers, employees, accountants,
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counsel, financial advisers and other representatives and affiliates to hold,
any confidential information in accordance with the Confidentiality Agreement.
(b)(i) Subject to the conditions set forth elsewhere in this
Section 5.4, Parent shall be entitled at its sole expense at reasonable times,
and in a manner reasonably designed to minimize disruption to the operations of
the Company, to conduct due diligence on the Company's owned or leased real
property ("Property") and building systems thereon, including but not limited
to, title, the interior of any improvements and the structural elements thereof,
and including but not limited to a Phase I and Phase II environmental assessment
of the Property, including testing and sampling for the presence of any
Materials of Environmental Concern, and any other test, analysis or inspection
of the Property deemed appropriate by Parent in Parent's sole discretion, and
the results of such inspection shall be satisfactory to Parent in Parent's sole
discretion.
(ii) The Company shall, and shall cause its subsidiaries to,
fully cooperate with Parent's due diligence and Parent shall have access to the
Property and to the Company's and its subsidiaries' personnel knowledgeable
about environmental matters at the Property during normal business hours to
perform the due diligence, including inspection and sampling by Parent or
Parent's employees, agents, representatives, contractors, or subcontractors.
(iii) Parent shall cause any contractor ("CONTRACTOR")
retained to conduct the Phase I or Phase II environmental assessment of the
Property, or to conduct any other physical inspections of the Property that
requires access thereto, to maintain with an insurance company or companies that
are properly licensed, the following types of insurance to cover the
Contractor's activities at the Property: (x) comprehensive general liability
insurance with a limit of not less than $2,000,000 per occurrence; (y)
automobile liability insurance with a limit of not less than $2,000,000 per
occurrence; and (z) errors and omission insurance with a limit of not less than
$2,000,000 per occurrence. Such insurance coverage shall list the Company as an
additional insured. Contractor shall also maintain or cause to be maintained
worker's compensation insurance with limits of liability not less than those
required by law.
(iv) Subsequent to performing any inspection or testing of the
Property, Parent shall promptly restore the Property to the condition that
existed immediately prior to Contractor's entrance upon the Property, and agrees
to repair, restore, or replace any and all damage to the Property caused by
Parent's or Contractor's activities. Parent shall be responsible to lawfully
dispose of any soil or groundwater removed by Contractor from the surface or
subsurface of the Property. Parent agrees that it shall indemnify and hold
Company harmless from any and all claims, damages (including personal injury and
property damage), and other liabilities arising out of and to the extent caused
by the acts of Contractor or Parent while present on the Property.
(v) Parent agrees to provide Company with a copy of all Phase
I and Phase II environmental reports, and any other report arising from Parent's
inspection of the Property.
SECTION 5.5 REASONABLE BEST EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the Company, Parent and Acquisition agrees to use
reasonable best efforts to take, or
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cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate in the most expeditious manner practicable the
transactions contemplated by this Agreement, including (i) the making of all
necessary applications, registrations and filings (including filings with
Governmental Entities, if any, and making the filings and taking such other
actions as are required by Section 5.11 hereof), (ii) the obtaining of all
necessary actions or nonactions, licenses, consents, approvals or waivers from
Governmental Entities and other third parties, including, without limitation,
all Governmental Approvals (as hereinafter defined), (iii) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement and (iv)
the defending of any lawsuits or other legal proceedings, judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including the using of all reasonable best
efforts necessary to lift, rescind, vacate or mitigate the effect of any stay,
injunction or restraining order or other order adversely affecting the ability
of any party hereto to consummate the transactions contemplated hereby.
(b) The Company shall give prompt written notice to Parent,
and Parent shall give prompt written notice to the Company, of (i) any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate in any material respect, or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement. Each of
Parent and Acquisition, on the one hand, and the Company, on the other hand,
hereby represent that, other than as previously disclosed to each other on the
Disclosure Schedule (which disclosure shall not constitute a breach), as of the
date hereof they do not have actual knowledge of a breach of the representations
and warranties being made by the other party, PROVIDED HOWEVER that a party
alleging a breach of the representation or warranty made by the other party
pursuant to this sentence must reasonably demonstrate that such other party did
in fact possess such actual knowledge. Parent and Acquisition on the one hand
and the Company on the other hand each hereby represent that they have not
provided any information to the other or made any statements to the other which
would (or with the passage of time would) be reasonably likely to permit or
allow such party to claim that the other party did indeed possess such actual
knowledge. No notice given pursuant to this paragraph shall have any effect on
the representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein.
SECTION 5.6 TAKEOVER STATUTES; INCONSISTENT ACTIONS. If any
"fair price," "moratorium," "control share," "business combination,"
"shareholder protection" or similar or other anti-takeover statute or regulation
(including, without limitation, Sections 78.378 through 78.3793 and Sections
78.411 through 78.444 of the NRS) shall become applicable to the Merger or any
of the other transactions contemplated hereby or by the Voting Agreement, the
Company and the Board of Directors of the Company shall grant such approvals and
take all such actions so that the Merger and the other transactions contemplated
hereby and by the Voting Agreement may be consummated on the terms contemplated
hereby and otherwise eliminate the effects of such statute or regulation on the
Merger and the transactions contemplated hereby.
SECTION 5.7 INDEMNIFICATION, EXCULPATION AND INSURANCE.
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(a) The Articles of Incorporation and the Bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
Articles of Incorporation and Bylaws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified in any manner
that would adversely affect the rights thereunder of individuals who on or prior
to the Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required by law.
(b) For a period of the applicable statute of limitations
after the Effective Time, the Surviving Corporation shall indemnify and hold
harmless (and shall also advance expenses as incurred to the fullest extent
permitted under applicable law to, subject to the provision by such person of an
undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
person is not entitled thereto) each person who is or has been prior to the date
hereof or who becomes prior to the Effective Time an officer or director of the
Company or any of the Company's subsidiaries (the "INDEMNIFIED PERSONS") against
(a) all losses, claims, damages, costs, expenses (including, without limitation,
reasonable counsel fees and out-of-pocket expenses), settlement payments or
liabilities arising out of or in connection with any claim, demand, action,
suit, proceeding or investigation based in whole or in part on or arising in
whole or in part out of the fact that such person is or was an officer or
director of the Company or any of its subsidiaries, pertaining to any matter
existing or occurring at or prior to the Effective Time and whether or not
asserted or claimed prior to or at or after the Effective Time ("INDEMNIFIED
LIABILITIES") and (b) all Indemnified Liabilities based in whole or in part on
or arising in whole or in part out of or pertaining to this Agreement or the
transactions contemplated hereby, in each case to the fullest extent required or
permitted under applicable law or under the Surviving Corporation's Articles of
Incorporation or Bylaws to the fullest extent permitted under applicable law.
The parties hereto intend, to the extent not prohibited by applicable law, that
the indemnification provided for in this Section 5.7(b) shall apply without
limitation to negligent acts or omissions by an Indemnified person. Parent
hereby guarantees the payment and performance of the Surviving Corporation's
obligations in this Section 5.7(b). Each Indemnified person is intended to be a
third party beneficiary of this Section 5.7(b) and may specifically enforce its
terms. This Section 5.7(b) shall not limit or otherwise adversely effect any
rights any Indemnified person may have under any indemnification agreement
disclosed on Section 5.7(b) of the Company Disclosure Schedule or under the
Company's Articles of Incorporation or Bylaws.
(c) For four years from the Effective Time, the Surviving
Corporation shall maintain in effect directors' and officers' liability
insurance in respect of acts or omissions occurring prior to the Effective Time
covering those persons who are currently covered by the Company's directors' and
officers' liability insurance policy (a copy of which has been heretofore made
available to Parent) on terms no less favorable to such indemnified parties than
those of such policy in effect on the date hereof; PROVIDED that, in satisfying
its obligations under Section 5.8(d) the Surviving Corporation shall not be
obligated to pay premiums in excess of 300% of the amount per annum the Company
paid in its last full fiscal year, which amount the Company has disclosed to
Parent in writing prior to the date hereof; PROVIDED FURTHER that if the premium
for such coverage exceeds such amount, the Surviving Corporation shall purchase
a policy with the greatest coverage reasonably available for such 300% of the
annual premium; provided
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however that Parent shall be entitled to satisfy its obligations under this
Section 5.7(c) by purchasing a "tail" policy providing for comparable coverage.
(d) The obligations of the Company, the Surviving Corporation
and Parent contained in this Section 5.7 shall be binding on the successors and
assigns of Parent and the Surviving Corporation. If Parent, the Surviving
Corporation or any of their successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in each
such case, proper provisions shall be made so that the successors and assigns of
Parent or the Surviving Corporation, as the case may be, shall assume the
obligations set forth in this Section 5.7.
SECTION 5.8 FEES AND EXPENSES. Except as provided in Section
7.5, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses.
SECTION 5.9 PUBLIC ANNOUNCEMENTS. Parent and Acquisition, on
the one hand, and the Company, on the other hand, will not issue any press
release or other public statements with respect to the transactions contemplated
by this Agreement, including the Merger, without first obtaining the prior
consent of the other party; PROVIDED, HOWEVER, in the event of any press release
that may be required by applicable law, court process, or by obligations
pursuant to any listing agreement with any national securities exchange, the
Australian Stock Exchange or the NASDAQ National Market, the parties will use
reasonable best efforts to consult with each other before issuing, and to
provide each other the opportunity to review and comment upon, any such press
release or other public statement.
SECTION 5.10 STATUS OF COMPANY EMPLOYEES; EMPLOYEE BENEFITS.
(a) Parent agrees that following the Effective Time, the
employees of the Company and its subsidiaries who are employed by the Surviving
Corporation or its subsidiaries ("COMPANY EMPLOYEES") shall become eligible
within six months of Effective Time to participate in the employee benefit plans
and arrangements maintained by Parent or its subsidiaries for its U.S. employees
("PARENT BENEFIT PLANS"), in the same manner as similarly situated employees of
Parent. Prior to the date the Company Employees become eligible to participate
in Parent Benefit Plans, they shall continue to participate in the employee
benefit plans and arrangements in effect immediately prior to the Effective
Time. Parent or its subsidiaries shall grant the Company Employees credit for
all service credited by the Company for purposes of eligibility, vesting and the
determination of benefits under vacation and severance pay plans. Parent shall,
and shall cause the Surviving Corporation to, offer employment to all employees
of the Company employed by the Company as of the Effective Time, and honor in
accordance with their terms all employee benefit obligations to current and
former employees under the Employee Plans in existence on the date hereof.
Notwithstanding the foregoing, nothing contained herein shall affect Parent's or
the Surviving Corporation's right to terminate the employment of any Company
Employee following the Effective Time or to amend or terminate any Employee in
accordance with its terms.
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(b) Any pre-existing condition exclusion under any Parent
Benefit Plan providing medical or dental benefits shall be waived for any
Company Employee who, immediately prior to commencing participation in such
Parent Benefit Plan, was participating in an Employee Plan providing medical or
dental benefits and had satisfied any pre-existing condition provision under
such Employee Plan.
(c) Any expenses that were taken into account under an
Employee Plan providing medical or dental benefits in which the Company Employee
participated immediately prior to commencing participation in a Parent Benefit
Plan providing medical or dental benefits shall be taken into account to the
same extent under such Parent Benefit Plan, in accordance with the terms of such
Parent Benefit Plan, for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions and life-time benefit limits.
SECTION 5.11 GOVERNMENTAL APPROVALS.
(a) The parties hereto shall cooperate with each other and use
their reasonable best efforts (and shall use their reasonable best efforts to
cause their respective directors and officers to do so) to (i) promptly prepare
and file and, in any event, will file no later than 30 days after the date
hereof, all necessary documentation to effect all applications, notices,
petitions and filings necessary or advisable to consummate the Merger and the
other transactions contemplated by this Agreement and (ii) to obtain as promptly
as practicable all permits, registrations, licenses, findings of suitability,
consents, variances, exemptions, orders, approvals and authorizations of all
third parties and Governmental Entities (including Licenses in respect of any
Gaming Law) which are necessary or advisable to consummate the Merger and the
other transactions contemplated by this Agreement, including all required
initial application and documents in connection with obtaining approvals under
the Gaming Laws ("GOVERNMENTAL APPROVALS"). The parties hereto shall file
initial applications and documents related to all other Governmental Approvals
within such time as necessary for such Governmental Approvals to be granted on
or before the effective date of the respective approvals required under
applicable Gaming Laws and (ii) comply (and cause their respective directors and
officers and employees to so comply) with the terms and conditions of all such
Governmental Approvals. Each of the parties hereto shall act reasonably and
promptly in responding to additional requests in connection with filing for or
otherwise attempting to obtain or renew any Governmental Approvals. Without
limiting the foregoing, each of Parent and the Company (the "NOTIFYING PARTY")
will notify the other promptly of the receipt of comments, requests or other
material communications from Governmental Entities relating to Governmental
Approvals, and will supply the other party with copies of all material
correspondence between the Notifying Party or any of its representatives and
Governmental Entities with respect to Governmental Approvals; provided, however,
that it shall not be required to supply the other party with copies of
correspondence relating to the personal applications of individual applicants
except for evidence of filing.
(b) Notwithstanding the foregoing or any other provision of
this Agreement, Parent shall have no obligation or affirmative duty under this
Section 5.8 to cease or refrain from the ownership of any assets or properties,
or the association with any person or entity which association is material to
the operations of Parent, whether on the date hereof or at any time in the
future.
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT
THE MERGER. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) STOCKHOLDER APPROVAL. The Stockholder Approval shall have
been obtained.
(b) NO INJUNCTIONS OR RESTRAINTS. No litigation brought by a
Governmental Entity shall be pending, and no litigation shall be threatened by
any Governmental Entity, which seeks to enjoin or prohibit the consummation of
the Merger, and no provision of applicable law or regulation, temporary
restraining order, decree, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition, in each case preventing the consummation of the Merger, shall be in
effect.
(c) HSR ACT. The applicable waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated.
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND
ACQUISITION. The obligations of Parent and Acquisition to effect the Merger are
also subject to the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality or Material Adverse Effect shall be true and correct in all respects
(taking into account such qualifications as to materiality or Material Adverse
Effect), and those not so qualified shall be true and correct in all material
respects (PROVIDED that, notwithstanding the foregoing, the representations and
warranties of the Company set forth in Section 3.2 hereof shall be true and
correct in all respects), in each case as of the date of this Agreement and as
of the Closing Date, as though made on and as of the Closing Date (PROVIDED that
those representations and warranties which address matters only as of a
particular date shall be true and correct as of such date), and Parent shall
have received a certificate of an executive officer of the Company to that
effect.
(b) AGREEMENTS AND COVENANTS. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date, and Parent shall have received a certificate of an executive
officer of the Company to that effect.
(c) NO MATERIAL ADVERSE EFFECT. From the date of this
Agreement through and including the Effective Time, no event or events shall
have occurred which, individually or in the aggregate, would reasonably be
expected to have a Company Material Adverse Effect.
(d) CONSENTS AND APPROVALS. Parent shall have received
evidence, in form and substance reasonably satisfactory to it, that such
licenses, permits, consents, approvals, waivers, findings of suitability,
authorizations, qualifications and orders of, and declarations, registrations,
filings, notices or other approvals (including, without limitation, all Licenses
from applicable
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Gaming Authorities), including Governmental Approvals, required to be made or
obtained by the Company, Acquisition or Parent from all Governmental Entities in
connection with the Merger and the consummation of the transactions contemplated
hereby, and to permit the parties to consummate the Merger and the Surviving
Corporation and its subsidiaries to conduct their respective businesses in the
jurisdictions regulated by such Governmental Entities after the Effective Time
in substantially the same manner as conducted by the Company and its
subsidiaries prior to the Effective Time, have been obtained or made, as
applicable, by the Company, Acquisition or Parent and are in full force and
effect.
(e) THIRD PARTY CONSENTS. The Company shall have obtained the
consent, approval or waiver of each person that is not a Governmental Entity
whose consent is required to consummate the transactions contemplated by this
Agreement and to permit the Surviving Corporation and its subsidiaries to
conduct their respective businesses after the Effective Time in the same manner
as conducted by the Company and its subsidiaries prior to the Effective Time,
except those for which the failure to obtain such consent, approval or waiver
could not reasonably be expected to result in a Company Material Adverse Effect.
(f) CERTIFICATES AND OTHER DELIVERIES. The Company shall have
delivered, or caused to be delivered, to Parent (i) a certificate of good
standing from the Secretary of State of the State of Nevada and of comparable
authority in other jurisdictions in which the Company and its subsidiaries are
incorporated or qualified to do business stating that each is a validly existing
corporation in good standing; (ii) duly adopted resolutions of the Board of
Directors and stockholders of the Company approving the execution, delivery and
performance of this Agreement and the instruments contemplated hereby, certified
by the Secretary of the Company; and (iii) a true and complete copy of the
certificate of incorporation or comparable governing instruments, as amended, of
the Company and its subsidiaries certified by the Secretary of State of the
state of incorporation or comparable authority in other jurisdictions, and a
true and complete copy of the Bylaws or comparable governing instruments, as
amended, of the Company and its subsidiaries certified by the Secretary of the
Company and its subsidiaries, as applicable.
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE
COMPANY. The obligations of the Company to effect the Merger are also subject to
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations of Parent and Acquisition contained in this Agreement that are
qualified as to materiality or Material Adverse Effect shall be true and correct
in all respects (taking into account such qualifications as to materiality or
Material Adverse Effect), and those not so qualified shall be true and correct
in all material respects as of the Closing Date as though made on and as of the
Closing Date (PROVIDED that those representations and warranties which address
matters only as of a particular date shall be true and correct as of such date),
and the Company shall have received a certificate of an executive officer of
Parent to such effect.
(b) AGREEMENTS AND COVENANTS. Parent shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. The Company shall have received a certificate of an executive officer of
Parent to such effect.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after the Stockholder
Approval has been obtained:
(a) by mutual written consent of Parent and the Company, if
the Board of Directors of each so determines by the affirmative vote of a
majority of the members of its entire Board of Directors;
(b) by Parent (PROVIDED that Parent is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein), upon a material breach of any representation, warranty, covenant or
agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case continuing twenty (20) days following notice to the Company of such breach
or untruth and of a nature such that the conditions set forth in Section 6.2(a)
or Section 6.2(b), as the case may be, would be incapable of being satisfied by
the then-scheduled Outside Date (as defined below);
(c) by the Company (PROVIDED that the Company is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein), upon a material breach of any representation, warranty,
covenant or agreement on the part of Parent or Acquisition set forth in this
Agreement, or if any representation or warranty of Parent or Acquisition shall
have become untrue, in either case continuing twenty (20) days following notice
to Parent of such breach or untruth and of a nature such that the conditions set
forth in Section 6.3(a) or Section 6.3(b), as the case may be, would be
incapable of being satisfied by the then-scheduled Outside Date;
(d) by either Parent or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the consummation of
the Merger and such order, decree or ruling or other action shall have become
final and nonappealable;
(e) by either Parent or the Company, if the Merger shall not
have occurred by July 31, 2001 (as it may be extended, the "OUTSIDE DATE"),
unless the failure to consummate the Merger is the result of a breach of
covenant set forth in this Agreement or a material breach of any representation
or warranty set forth in this Agreement by the party seeking to terminate this
Agreement; PROVIDED that either party may extend the Outside Date, but no more
than four times in the aggregate, and each time by one month, but in no event
beyond November 30, 2001, by providing written notice thereof to the other party
between three (3) and five (5) business days prior to the next scheduled Outside
Date if (i) the Merger shall not have been consummated by such date because the
requisite Governmental Approvals required under Section 6.2(d) have not been
obtained and are still being pursued, (ii) the party seeking to extend has
satisfied all the conditions to Closing required to be satisfied by it and has
not violated any of its obligations under this Agreement in a manner that was
the cause of or resulted in the failure of the Merger to occur on or before the
Outside Date, and (iii) it is reasonably probable, based on, among other things,
the status of completed regulatory filings, scheduled regulatory meetings and
the advice
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of regulatory counsel to such party, that the requisite Governmental Approvals
will be obtained within such extension period; PROVIDED HOWEVER that the Company
shall not be permitted to extend the Outside Date if it has breached the first
sentence of Section 5.3(a); and PROVIDED FURTHER HOWEVER that if the only
Governmental Approvals that have not been obtained are those of the Gaming
Authorities in any state in which Parent is not licensed as at the date hereof
but where the Company is so licensed, then Parent may not extend the Outside
Date, and shall be required to close (assuming all other conditions are then
satisfied or waived, and assuming Parent can do so without violating applicable
Gaming Laws), notwithstanding the failure to obtain such Governmental Approvals,
but the parties agree to reasonably cooperate in such event to enable the
Company to minimize the economic consequences to the Company of such action and
to discharge its remaining obligations under existing contracts, and to ensure
compliance with applicable Gaming Laws;
(f) by Parent (PROVIDED that the terminating party is not in
material breach of any of its obligations hereunder), if the Stockholder
Approval shall not have been obtained at a duly held meeting of the Company's
stockholders or at any adjournment or postponement thereof; or
(g) by Parent, if the Board of Directors of the Company or any
committee thereof withdraws or modifies or amends adversely its recommendation
of this Agreement or the Merger following the receipt by the Company of a
Takeover Proposal or shall have resolved to do so, (ii) recommends a Takeover
Proposal to the Company's stockholders or shall have resolved to do so, or (iii)
the Board of Directors of the Company determines to accept a Superior Proposal
or shall have entered into a definitive agreement with respect to a Takeover
Proposal;
(h) by Parent, if there shall have been a material breach of
any provision of Section 5.2;
(i) by the Company, prior to the Stockholder Approval, if the
Board of Directors determines to enter into a definitive agreement with respect
to an unsolicited written Superior Proposal; provided that the Company has
complied with all of the provisions of Section 5.2(d) hereof, and that it makes
simultaneous payment to Parent of the Termination Fee and Expenses; or
(j) by the Company, within 48 hours of February 16, 2001, if
Parent shall not have delivered to the Company by February 16, 2001, written
customary commitment letters from banks or other financial institutions of
national or international repute, to provide funds sufficient for the payment of
the aggregate Merger Consideration.
SECTION 7.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement by either the Company or Parent as provided in Section 7.1,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Acquisition or the Company or
their respective officers or directors, except as set forth in the last sentence
of Section 5.4(a), Section 5.9, this Section 7.2, Section 7.5 and Article VIII
which shall survive termination and except to the extent that such termination
results from the breach by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement, PROVIDED that in the event
of termination of this Agreement pursuant to
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Section 7.1(j) hereof, this Agreement shall forthwith become void and have no
effect on Parent, Acquisition or the Company or their respective officers or
directors, and such termination shall be the sole and exclusive remedy of the
parties in such circumstance and neither Parent nor Acquisition, on the one
hand, or the Company, on the other hand, shall have any further remedy against
the other, except as set forth in the last sentence of Section 5.4(a), Section
5.9, this Section 7.2 and Article VIII which shall survive such termination.
SECTION 7.3 AMENDMENT. This Agreement may be amended by the
parties at any time in accordance with applicable law. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 7.4 EXTENSION; WAIVER. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other party contained
in this Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.3, waive compliance by the other party with
any of the agreements or conditions contained in this Agreement. Any agreement
on the part of a party to any such extension or waiver shall be valid only if
set forth in an instrument in writing, signed on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
SECTION 7.5 TERMINATION FEE.
In the event (i) the Company terminates this Agreement
pursuant to Section 7.1(i) or (ii) Parent terminates this Agreement pursuant to
Section 7.1(g) or Section 7.1(h), then in each case Parent and Acquisition would
suffer direct and substantial damages, which damages cannot be ascertained with
reasonable certainty, and hence to compensate Parent and Acquisition for such
damages, and as liquidated damages and not a penalty, and as the sole and
exclusive remedy of Parent and Acquisition against the Company for the damages
suffered, the Company shall pay to Parent, at the time of termination, an amount
equal to $6.25 million (the "TERMINATION FEE") and an amount equal to Parent's
and Acquisition's actual and documented reasonable out-of-pocket expenses
incurred by Parent or Acquisition in connection with the Merger, this Agreement
and the consummation of the transactions contemplated hereby, including, without
limitation, the reasonable fees and expenses payable to all attorneys,
accountants, investment banking firms and their respective agents incurred in
connection with the transactions contemplated hereby, but in any event not to
exceed $1.75 million (the "EXPENSES"). In addition, if this Agreement is
terminated by either Parent or the Company pursuant to Section 7.1(e) or Section
7.1(f) or by Parent pursuant to Section 7.1(b) and at the time of such
termination, Parent is not in material breach of this Agreement, then the
Company shall (but only if the termination is pursuant to Section 7.1(f) or
7.1(b)), pay to Parent, at the time of termination, the Expenses, and, if the
Company shall, within 9 months after such termination, enter into an agreement
with respect to a Takeover Proposal, then the Company shall pay the Termination
Fee and other Expenses (to the extent not previously paid) concurrently with
entering into any such agreement, PROVIDED that no Termination Fee or Expenses
shall be payable in the event of a termination pursuant to Section 7.1(e) hereof
unless (i) prior to any such termination, a Takeover Proposal shall have been
made and not withdrawn, and (ii) such termination is not solely the result of a
failure to obtain the requisite Governmental Approvals
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from Gaming Authorities required under Section 6.2(d). Any payments required to
be made pursuant to this Section 7.5 shall be made by wire transfer of same day
funds to an account designated by Parent.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time of the
Merger.
SECTION 8.2 NOTICES. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or Acquisition, to
Aristocrat Leisure Limited
71 Longueville Road
Lane Cove, NSW 2066 Australia
Facsimile: 61-2-9420-1354
Attention: Gavin Isaacs
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Facsimile: (212) 735-2000
Attention: Howard L. Ellin, Esq.
(b) if to the Company, to:
Casino Data Systems
3300 Birtcher Drive
Las Vegas, Nevada 89118
Facsimile: (702) 407-1600
Attention: Steve Weiss
with a copy to:
Gibson, Dunn & Crutcher, LLP
333 South Grand Avenue
Los Angeles, California 90071
Facsimile: (213) 229-6141
Attention: Jonathan K. Layne, Esq.
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SECTION 8.3 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) "knowledge" means a fact, event, circumstance or
occurrence actually known, or that reasonably should have been known by an
officer of a comparable company with comparable responsibilities by virtue of
such responsibilities, by any of the executive officers of the Company or
Parent, as the case may be;
(c) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity;
and
(d) a "subsidiary" with respect to any person means any
corporation, partnership, joint venture association, trust, unincorporated
organization or other entity, of which such person or any other subsidiary of
such person (i) owns, directly or indirectly, 50% or more of the outstanding
voting securities or equity interests, (ii) is entitled to elect at least a
majority of the Board of Directors or similar governing body or (iii) is a
general partner (excluding such partnerships where such person or any subsidiary
of such person do not have a majority of the voting interests in such
partnership).
SECTION 8.4 INTERPRETATION. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" and
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
SECTION 8.5 COUNTERPARTS; FACSIMILE. This Agreement may be
executed in one or more counterparts and via facsimile, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties.
SECTION 8.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement, the Voting Agreement and the Confidentiality Agreement
constitute the entire agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement and except for the provisions of Section 5.8
are not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
SECTION 8.7 GOVERNING LAW. This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Nevada, regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereof.
SECTION 8.8 ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties,
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except that Parent and Acquisition may assign this Agreement or any of their
rights, interests or obligations hereunder to any of their respective
affiliates, PROVIDED HOWEVER that no such assignment shall relieve Parent of its
obligations hereunder. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 8.9 ENFORCEMENT. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Nevada or in Nevada state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Nevada or
any Nevada state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, (b) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Nevada.
SECTION 8.10 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (a) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (b) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (c) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (d) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.10.
SECTION 8.11 PERSONAL LIABILITY. This Agreement shall not
create or be deemed to create or permit any personal liability or obligation on
the part of any direct or indirect stockholder of the Company or Parent or any
officer, director, employee, agent, representative or investor of any party
hereto.
SECTION 8.12 SEVERABILITY. Any term or provision of this
Agreement that is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
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any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific words or
phrases, or to replace any invalid, void or unenforceable term or provision with
a term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision.
SECTION 8.13. FINANCING. Notwithstanding anything contained
elsewhere herein, the parties acknowledge and agree that it shall not be a
condition to the obligations of Parent or Acquisition to effect the Merger that
Parent has sufficient funds for the payment of the aggregate Merger
Consideration.
SECTION 8.14. MATERIALITY. Notwithstanding any numeric or
monetary thresholds or limitations contained herein, the parties hereby
specifically acknowledge and agree that no such limitations or thresholds shall
be deemed to constitute an acknowledgment or indication as to the materiality of
the item in question or of any other item whatsoever.
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IN WITNESS WHEREOF, Parent, Acquisition and the Company have caused
this Agreement and Plan of Merger to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
PARENT:
ARISTOCRAT LEISURE LIMITED,
an Australian company
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
ACQUISITION:
CEDAR ACQUISITION CORP.,
a Nevada corporation
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
THE COMPANY:
CASINO DATA SYSTEMS,
a Nevada corporation
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
